The concession marked one of the most damaging privacy gaffes to hit a leading US technology company since revelations in 2013 that the country's National Security Agency had been spying on their users. The companies involved, including Microsoft, reacted with outrage at the secret government snooping.
On Thursday, the software company first sought to play down the outcry over its email search in a statement defending the move, before following up only hours later with a promise of new and stronger procedures to reassure users that their privacy would be protected in such cases.
Microsoft's examination of a user's Hotmail account took place after it was tipped off that the account holder, a blogger, had been handed some stolen lines of code from the Windows 8 operating system. It used the information to identify and fire an employee accused of taking the code.
The email search was revealed in a case by US prosecutors against the employee, Alex Kibalko.
Microsoft initially released a statement claiming that, although it did not have a court order to conduct the search, it had good reason to believe the blogger had received the code. It added that it searched users' email accounts "only in the most exceptional circumstances".
The company's privacy policy gives it the right to look at private information to "protect the rights or property of Microsoft or our customers". Soon after, however, it released a second statement outlining new steps to reassure users it would not spy on their private communications.
These would include referring all cases like this to a former federal judge to seek an independent opinion, based on the same standards of evidence that would apply if it was seeking an official court order, said John Frank, deputy general counsel.
"The privacy of our customers is incredibly important to us, and while we believe our actions in this particular case were appropriate given the specific circumstances, we want to be clear about how we will handle similar situations going forward," Mr Frank said.
Microsoft also discloses twice a year how many searches such as this that it has carried out - the same level of disclosure that it has pressed the US government to reveal searches by the NSA.
The obvious conclusion is that Microsoft doesn't respect anyone's privacy.
If you use its Outlook webmail system (formerly called Hotmail), its Skype VoIP and chat service, or any other Microsoft software products including Windows and Microsoft Office, your communications likely are vulnerable not only to intelligence agencies but also private criminals using malware.
Leave Microsoft and its cozy relationships with spies behind and move to open source software, where the spooks can't hide backdoors and such. Governments and corporations have no right to spy on free, honest folks.