Windows Media Player 'phones home' when you're watching DVDs, but whether or not this is either a surprise or a serious privacy issues kind of depends on your point of view. Security consultant Richard Smith thinks it is, and documents what WMP does, and the data it sends.
It contacts a Microsoft server to get title and chapter information about the DVD, which is snooping if you look at it one way, and a mechanism for delivering handy context-based services if you look at it another.
What Microsoft could do with this information and what Microsoft is doing with it however are probably two separate things. It is feasible to use the data to track preferences of individual users, associating it with email addresses, thus producing a handy database that could be used to sell movies, or could be sold to third parties. But if Microsoft went that far down the line it would get into serious trouble, so it's really not going to do that deliberately. Data based on watching preferences does have a value even if it's not associated with a particular individual, but if Microsoft did collate it, use it or sell it, it wouldn't exactly be invading individuals' privacy if these individuals weren't specified, would it? Granted, you could maybe get irritated about Microsoft making money out of you without giving you a cut, but it does that already, and you live with it, right?
The serious point here though is that there is going to be a lot more of this sort of stuff about, and we'll more and more find companies of all sort wobbling back and forth across the fuzzy line that separates service delivery from privacy invasion. One of the great Next Big Things will be context-based services; the mobile phone company (say) will know who you are, where you are, what you like, what you can spend, you're shoe size, any amount of stuff about you. Now, it quite probably will have some of this data because you deliberately gave it so shopping for shoes would be easier in the future. Some more of it might have been gathered because the system watched what you were doing and tucked the information away in order to 'help' you make choices in the future. Helpful or invasive? You could call it either, depending on your point of view.
The fact that companies are going to have this kind of information will undoubtedly lead to massive privacy scandals, because some of it's going to leak, some of them are going to do intensely dumb and self-destructive things with it, but it is not going to be a simple matter of it being absolutely wrong for them to have that data.
You do of course need to be told what they're collecting and what they propose to do with, and you need the option to refuse to give them it. Which is where Microsoft went wrong in this case, of course, but if we're going to get too worked up about this one we're going to have to get really worked up about the more serious stuff in a couple of years time. As Scott says, you have no privacy, live with it. ®