Microsoft this week banned "a small percentage" of Xbox 360 gamers from the Xbox Live online gaming network, citing violations of the company's terms of service: These gamers are known to have modified, or "modded," their consoles to play pirated game discs.

"All consumers should know that piracy is illegal and that modifying their Xbox 360 console to play pirated discs violates the Xbox Live terms of use, will void their warranty, and result in a ban from Xbox Live," a Microsoft statement reads. "The health of the video game business depends on customers paying for the genuine products and services they receive from manufacturers, retailers, and the third parties that support them."

Some reports claim that as many as 600,000 gamers were banned as part of this action, which is possible given that Microsoft has more than 20 million users signed up on Xbox Live. Although Microsoft won't provide details about the Xbox 360 mods it has detected, or how it does detect them, many modified consoles include a hardware chip that bypasses copy-protection schemes. Banned gamers can continue using the Xbox 360 to play games, but they can't connect to Xbox Live.