If you want to consider another example what happens if a cheat hack appears that gives you a big advantage over other online players; would M$ be within their

If you want to consider another example what happens if a cheat hack appears that gives you a big advantage over other online players; would M$ be within their rights to ban you then? Is the only difference that gamers believe one to be morally wrong (cheating) and one to be floating somewhere in the middle (chipping) I get your point, since one is a software mod and the other is a hardware mod. The difference is that our law says nothing about software modifications, while it does explicitly allow a consumer to mod consoles: you have the right to be able to make a backup disc of any game you purchase, and use those backup disks to play the games. You need to mod your console for that, and you can literally walk into any computer store and ask your X-Box to be modded. But, I think you made a good point: the hardware in essense makes the software function differently, so if you would convert a certain software cheat to a hardware mod (if it were possible), you have a problem. So I think the (legal) matter, in the end, is intent. This is why I think it's weird that Microsoft chose to ban all people that modded their console, instead of all the people that pirated games. One targets the fact that a hardware modification was made, the other targets the intent.