If it's intended for people who have always supported MS then disclosing that fact wouldn't make a difference. You have to be pretty naive to push the blame onto Youtubers, especially in the current climate of them having their livings squeezed by copyright claims at the moment. I would question the morals of this 'illegal' move based on timing alone. MS are offering the apple to starving people. Some will jump on board willingly because they're shills anyway, some will jump on board because they lack integrity and some will jump on board because they're getting squeezed financially by Youtube's new rules.

1. You are told at the begining of an infomercial that it's a paid advertisement. These YouTubers were told NOT to disclose this.

2. "The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media." That means that unless they are in a regular advertisement (TV, Radio, Print) they must say that they are being paid to endorse a specific company or product. 

3. Nobody is saying that they can't pay Youtubers to advertise. But they need to disclose that they are paying people to do so.

I don't trust either.  I rather try it out myself.  I have played games that were panned and loved it and on the other hand played games that were critically acclaimed and couldn't get into it.  To each their own but an example is how Ryse got such poor reviews and almost didn't get the game but then tried it myself and really enjoyed it.  Sometimes reviews can be helpful but most of the time they are subjective based on a person's opinion and tastes.  Plus many of the video gaming sites are bias based on their preference of games and gaming systems and the need to gain advertising revenue by flame baiting that you have to take a lot of what you read with a large dose of salt.

There is more than just celebrities in those commercials.

The contract isn't really asking people to do anything unethical in my opinion. And maybe MS's lawyers were careful to do that when putting together that contract.

This is an OTT example but if I pay a hitman to attempt to kill someone and they fail and I'm found out, do you think there would be no charges on me because I simply offered money for someone to break the law? I didn't do it myself?

If it was buying advertising that would be perfectly fine, but this is very clearly not just paying for some promotion, to not allow the youtubers to say anything bad about the system and not acknowledge the fact that the views they're expressing are not their own but a paid endorsement is the point where this becomes illegal. I bolded the anything to point out... if reviewing or talking about a game to get your money you're going to have to give it 100%, 10/10 , A+ whatever rank you use, because to give it lower suggests something about it is negitive and you get no monies.

Until this is cleared up a lot of people are going to be taking positive videos about the X1 and bundling them all up as Shrill advertisers and that is just wrong. There is actually a hell of a lot of people who legit love their new Xbox's and have a ton of videos about their cool new features and they're going to get shit rained on them because people will call them out as liars and paid advertisers, it undermines legit letsplayers and gamers.

Wow, horrible example. I'll ignore it.

It seems to me MS is paying people to make a commerical for their product. You don't have to mislead people to do that in my opinion. However, it seems like this is being compared to paying for positive reviews. Which is something completely different.

1. Who are you to say what they were intending? Who are you to say what kind of videos were being posted? It doesn't matter what the intention was. They launched a "promotion" that payed people money to show there products in a positive light while at the same time banning them from making it known that they were being paid to do so. That is both imoral and illegal. Imorall because it strips the integrity away from these online video's as a way for consumers to make informed decisions about the product and illegal because it breaks at least one part of the endorsment regulations.

That's much more difficult when you don't know what you're listening to is an endorsment. A celebrity is required to disclose that they are being paid for there endorsment unless they are in a traditional ad. 

also how is the example of a hitman even relevant? if someone hired a hitman they wouldn't let the world know. Machinima and MS obviously made it known or else no one would make the video. Either their lawyers know something most of us don't or Machinima and MS have pretty stupid lawyers.

So a commercial that is coming from a reviewer, is staged as a review, and is found alongside all of their other real reviews?

Wait, that's a review.