-defacto constant connection required (Microsoft claims it is searching for updates. They are really checking to see if you are pirating. Offline mode only for 24 hours on your machine; 1 hour on another console.).
-required internet connection to register your game in order to play it. (You can't just drop it in the console, install it then play. You have to go through the mess of 'authentication').
-games can only be traded or sold once, and only once- with publisher fees involved and the friend must be on your friends list, only at AUTHORIZED RETAILERS. (It should be none of Microsoft's business what I do with my product once I have bought it. See first sale doctrine of the United States of America).
-Kinect "always listens" for key commands (Yeah.... right. Like I am gonna let Microsoft in on my personal life, or risk muting myself in my own god damn domain.)
-Kinect must be connected in order for the console to function (So it can watch you. Microsoft has patented plans to charge per pay-per view according to what the camera sees. Camera asks to identify unknown people and stores that information on the console, which can be taken by Microsoft or hackers (illegally). I trust neither.).
-Must pay to turn internet "on" thru your Xbox system (I'm done letting anyone nickle and dime me).
Microsoft has since come out and clarified some of these statements. Earlier it was said that Microsoft would be charging a royalty fee for used games. As seen in the sources below, that isn't true. The publishers may, and the rule is that you may only trade or sell a used game once, and only once, and they have to be on your friends list for 30 days or more.