The China Digital Times points to a distressing FT item on Microsoft’s China portal.:

From MSN Money:
Microsoft’s new Chinese internet portal has banned the words "democracy" and "freedom" from parts of its website in an apparent effort to avoid offending Beijing’s political censors…
Attempts to input words in Chinese such as "democracy" prompted an error message from the site: "This item contains forbidden speech. Please delete the forbidden speech from this item."

With this, Microsoft is not simply abiding by Chinese censorship regulations, it’s going above and beyond what is required.:

MSN on Friday declined to comment directly on the ban on sensitive words, but its China joint venture said users of MSN Spaces were required to accept the service’s code of conduct. "MSN abides by the laws and regulations of each country in which it operates," the joint venture said. The MSN Spaces code of conduct forbids the posting of content that "violates any local and national laws".
But while China’s ruling Communist Party deals harshly with political dissenters, there is no Chinese law that bars the mere use of words such as democracy.

I switched to Apple quite some time ago, but I hadn’t completely abandoned Microsoft and consider the xbox a fine piece of work. That said, if there isn’t a retraction of this policy, or at least a better explanation, my next game console will be made by Sony.