http://www.ign.com/articles/2013/11/01/new-microsoft-privacy-statement-explains-how-xbox-ones-kinect-collects-data
In an updated privacy statement available to view here Microsoft has detailed how the Xbox One’s Kinect will use any data it collects during play. Xbox One owners are advised details about your appearance gleaned from Kinect’s facial recognition technology will be totally private, but are also reminded not to expect any level of privacy while chatting over the service.
In order to use the camera to sign you in, Kinect “measures distances between key points on your face to create a numeric value that represents only you.” This information stays on your console and is not shared. The value itself is stored as a “very long set of numbers” and, according to Microsoft, “[n]o one could look at the numbers and know they represent you.”
For gameplay purposes, Kinect will map the distances between your body’s joints to create a stick figure. The numeric values for your stick figure are temporarily stored in memory on your console during a gameplay session but are destroyed when you quit the session.
If you’re playing online “Microsoft may collect those numeric values to enable and improve gameplay and improve the gaming experience” but the values sent to Microsoft are “destroyed after analysis is complete.” The company notes you will not be able to be identified by your stick figure representation.
Some game titles may allow you to use defined facial expressions to control or influence a game. Microsoft explains this data stays on the console and is destroyed once your session ends. It cannot be used to identify you, according to the company.
Microsoft asserts players control what happens to photographs taken during gameplay and whether voice commands are captured for analysis.
Subject: How Does Xbox One Kinect Collect Data? 
