Why?
You heard a story of this type of behaviour? So you’ve not even witnessed it first hand?
In over 15 years of online gaming on my Xbox I’ve had about 1 actually hateful interaction (someone called me the F word after a game of PES). And because of these one in a thousand interactions Microsoft think they can be your judge jury and executioner after you’ve spent hundreds or thousands of pounds in their ecosystem?
You and I may well be reasonable people. I don't go around calling people racial slurs, or calling them fags etc. I'm not a dick. I'm not an immature 12 year old, so none of these things Xbox has implemented will ever be used against me.
I assume you are the same.
Why do they need to do it?
They don't want a hostile environment for people to play games in.
While I'm an adult, and could not give two fucks if someone called me a slur, and I wouldn't report them for doing so, I have a 12 year old who plays online, and he has joined up in groups for those games. I was watching him play, and he introduced himself to the other team mates, and one guy goes "how the fuck did we end up with some stupid fucking kid?. Just don't get in my way"
As they were playing one of the guys asks him if he has jerked off yet, and they all started laughing at him.
I told him to turn off the game, and he was a little shook.
I didn't report them to xbox as I don't raise no snitches.
But that type of shit should not stand.