"Your console has been banned." For many gaming enthusiasts, perhaps nothing is more unnerving than the prospect of losing the ability to duel with friends and strangers over the Internet for hours on end. Yet earlier this month, this fear became a reality for many Xbox owners when Microsoft banned a large number of consoles from its Xbox Live service. The move effectively prevents the machines from playing games online, and according to reports so far, the ban allegedly only affects consoles that have been modified by users in order to play pirated games. While Microsoft has not said how many machines were affected (other than shooting down the initially reported figure of 1 million), the sheer quantity of banned Xbox 360s that have shown up for resale on sites like eBay and craigslist suggests the number is still quite large. Corresponding with one of the most anticipated multiplayer title releases of the year, the ban sends a strong that Microsoft is not afraid to hit users where it hurts when it comes to their bottom line.

Yet, while the obvious lesson some may take away from this is, "Don't steal games," there is a much more subtle point to be made here about the power of online service providers wield over their users through their Terms of Service Agreements (or TOS).

No matter how much we rely on them to get on with our everyday lives, access to online services—like email, social networking sites, and (wait for it) online gaming—can never be guaranteed. That's because use of these services are generally governed by a Terms of Service ("TOS") agreement, in which you agree the operator may do what it wants, when it wants, regardless of how much time, effort, and money you invested. In the words, he who writes the TOS makes the rules, and when it comes to enforcing them, the service provider often behaves as though it is also the judge, jury and executioner.

So it is, too, in the realm of Xbox Live, at least so say the Terms of Service.

"Thou Shall Not Mod Your Xbox to Play Pirated Games"

16. Service Operation and Equipment.

. . . You agree that you are using only authorized software and hardware to access the Service, that your software and hardware have not been modified in any unauthorized way (e.g., through unauthorized repairs, unauthorized upgrades, or unauthorized downloads), and that . . . [a]ny attempt to . . . modify. . . any hardware or software associated with [Xbox Live] or with an original Xbox or Xbox 360 console is strictly prohibited . . . .

"Violators Will Found And Punished"

[Microsoft has] the right to send data, applications or other content to any software or hardware that you are using to access the Service for the express purpose of detecting an unauthorized modification. . . . [which] may result in cancellation of your account and/or your ability to access the Service, and the pursuit of other legal remedies by Microsoft.

"There Will Be No Trial. There is No Right to Appeal"

Microsoft reserves complete and sole discretion with respect to the operation of the Service.

Perhaps Xbox Live Director of Programming Larry Hryb, a.k.a. Major Nelson, explains it best:

Players who find their Gamertags banned from Xbox Livehave wound up in that situation due to violations of the XboxLive Terms of Use. . .

When a Gamertag comes up as violating our policies for online behavior, the person who owns that Gamertag is punished by being banned from the service. Keep in mind, this isn't just a ban on a particular game. This is a ban on the Xbox Live service as a whole, so you won't be able to go online at all during your ban. Initially, you may be banned for a day, a week, or depending on severity, permanently! Kiss that $50 goodbye.

Of course, these "absolute power to terminate" clauses are in no way unique to the Xbox Live TOS. While the mass ban provides a useful illustration of their danger, these terms can be found in nearly all TOS agreement for all kinds of services. There have been virtually no legal challenges to these kinds of arbitrary termination clauses, but we imagine this will be a growth area for lawyers. After all, imagine that instead of losing the ability to play games, you suddenly are unable to check your email. In that case, it will be more than $50 that you'll be kissing goodbye.