The Guardian reports that Microsoft worked closely with the NSA to collect user data, according to newly leaked documents.  The collaboration included overcoming encryption hurdles to chat conversations through Outlook.com and access to SkyDrive and Skype communications.

Microsoft responded with a statement saying they are compelled to comply with national security requests check new products to ensure they will be compliant with future requests.

The latest revelation comes as tech companies (most recently Yahoo!) continue to ask federal court to release sealed arguments against data collection requests.  With those documents sealed, Silicon Valley really is between a rock and a hard place: defy a request from the spookiest people in government, or risk bad PR.  For companies like Microsoft - whose recent advertising  has touted a commitment to privacy - even legally mandated cooperation looks like hypocritical government toadyism.