UPDATE: Microsoft has responded to revelations that the NSA and British spy counterpart GCHQ spied on Xbox Live communications, saying it hasn't detected any evidence to support that it happened and it wasn't sanctioned if it did.

A Microsoft representative issued the statement, "We're not aware of any surveillance activity. If it has occurred as reported, it certainly wasn't done with our consent."

Additionally Microsoft has joined the ranks of Google, Yahoo, LinkedIn, Facebook and Twitter to issue a jointly-authored document condemning the unauthorised surveillance of it's customers. "While the undersigned companies understand that governments need to take action to protect their citizens' safety and security, we strongly believe that current laws and practices need to be reformed."

Original story follows:

In documents released by government whistleblower Edward Snowden it has been revealed that gamers on Xbox Live and World of Warcraft, among others, could have been spied on by the U.S. government agency, the NSA since 2008.

U.S. and British government agents have been monitoring fantasy games like World of Warcraft and Second Life as well as Xbox Live by scooping up personal data.

In a paper titled "Exploiting Terrorist Use of Games & Virtual Environments" National Security Agency (NSA) warned of the possible implications of leaving online networks unmonitored. The paper doesn't mention if any terrorist plots were foiled in the online world but that there was a “vigorous effort” to extract data from games, including “exploitation modules” for Xbox Live and World of Warcraft.

A spokesperson for Blizzard, developers of World of Warcraft told The Guardian that, "We are unaware of any surveillance taking place. If it was, it would have been done without our knowledge or permission." Meanwhile Microsoft has declined to comment and it remains unclear how widespread the government snooping is.

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[Via Gamespot]