For Microsoft, this is very much a win the battle, lose the war situation. While they were perfectly within their legal rights to access the Hotmail account, it

For Microsoft, this is very much a win the battle, lose the war situation. While they were perfectly within their legal rights to access the Hotmail account, it was horribly bad optics. It just looks bad. And it's stuff like this that makes cloud services a hard sell to a large demographic. So while this may blow over, people will be more paranoid that Microsoft will decide that they have the right to look at your data, just because it exists on their servers. Google isn't much better in this regard. Amazon so far is better positioned because they don't offer any other private "consumer" services that they'd want to review. But really unless you have the hardware in your physical possession, you will always be subject to these problems.