I have never seen any hard evidence to support it.

I'm thinking that if Microsoft were spying on people it would have to be something imbedded in their 'proprietary' code and if that was the case, it would be a ballsy move on MS' part. If found out it could be a PR disaster. Like Tom had said, if they were downloading spyware to your box another company would most likely find out and jump on it like a duck on a June bug. Even though I'm not doing anything wrong or illegal, I've always been one that hates to be spied on, it makes me feel like I live in a police state. I use several different anti-spyware programs hoping that one might pick something up the other missed.