People don't expect privacy when sharing information with third parties, they expect confidentiality. But the law doesn't respect that. If you tell me in confidence, that you kidnapped the Limburg baby, I can legally tell whoever I want. I can even be forced by the government to tell them everything I know.

The difference is that phone companies don't record full transcripts. Just like my kinect isn't recording my room right now. That's why I have a reasonable expectation of privacy even though there is a kinect in the room.

But I don't have an expectation that the requests I make to xbox is private.