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The whole family sharing thing seemed like something they just latched onto after the bad press started to take hold.  None of the Microsoft executives or PR folk seemed to understand how it actually worked, and even the worst incarnation (i.e. one person can play at a time) would likely have been more harmful to publishers than used games.  They were probably glad for an excuse to get rid of it.

kitler53 did a good job tearing down most of his individual points