Section 5.4 of the Master End-User License Agreement for Microsoft Software (PDF) states:
Internet-Based Services Components. The Software contains components that enable and facilitate the use of certain Internet-based services. You acknowledge and agree that Microsoft may automatically check the version of the Software and/or its components that you are utilizing and may provide upgrades or fixes to the Software that will be automatically downloaded to your computer.
– Microsoft can remotely scan your computer to identify the version of the software you are using
– Microsoft can remotely and without your knowledge or consent push changes to the software you are using
There’s more than just privacy issues involved. While “upgrades and fixes” sound like a good thing, in some cases they can cause conflicts with other software. I’ve already had a personal instance where an automatic upgrade to the codecs being used by Windows Media Player broke its ability to play certain videos I had created.