Lot of Lies from Microsoft Here
X-Box live has a profanity filter that you need to physically opt out of.
Therefore for anybody to receive abusive language they would first have need to untick the box that says "stop abusive language"
Thereby giving consent.
Microsoft is just using this as an excuse ready for when it becomes public that they are scanning all your private data already.
They have seen the shit storm at Facebook and know what is coming down the line is going to hit them just as hard, so they are trying to justify their use of your data and their scanning of that data.
I could never understand why people saved stuff to the cloud and expected it to stay private.