The audio was captured by Xbox consoles "by mistake", the contractors were quoted as saying.
Do you have a Microsoft video gaming console Xbox at home? It is possible that third-party contractors working for the tech giant are listening to your living room talks.
After revealing that contractors listened to sensitive and personal conversations of users via Skype and virtual assistant Cortana -- which Microsoft has admitted -- Motherboard now claims the third-party vendors working for the company also "listened to the audio of Xbox users speaking in their homes in order to improve the console's voice command features".
The audio -- mostly of children as they played video games -- was captured by Xbox consoles "by mistake", the contractors were quoted as saying.
"Xbox commands came up first as a bit of an outlier and then became about half of what we did before becoming most of what we did," one former contractor was quoted as saying.
The contractors worked on Xbox audio data from 2014 to 2015 before Cortana was implemented into the console in 2016.
"Listening continued as the Xbox moved from using Kinect for voice commands over to Cortana," the report said on Wednesday.
Microsoft last month announced it plans to remove Cortana from the Xbox but the gaming console can still be controlled through voice commands with either Amazon Alexa or Google Assistant on external smart speakers.
The company said in a statement: "We've long been clear that we collect voice data to improve voice-enabled services and that this data is sometimes reviewed by vendors".
Last week, Microsoft admitted that third-party contractors were listening to voice conversations on Skype and virtual assistant Cortana.
"We've updated our privacy statement and product FAQs to add greater clarity and will continue to examine further opportunities to improve," the company said.
The updated privacy statement said that human review is used to help build, train and improve the accuracy of its Artificial Intelligence (AI) systems.
Microsoft has joined the likes of Google, Apple, Amazon, and Facebook who are in the dock for letting third-party contractors listen to users' talks.
Apple, Google, and Amazon recently suspended human review of user audio recordings after reports said the companies used third-party contractors to listen to users' voice recordings.
While Apple suspended the programme that let its virtual assistant 'Siri' listen to users' recordings for "quality control", Google stopped listening and transcribing Google Assistant recordings in Europe.
Catch the latest from the Consumer Electronics Show on Gadgets 360, at our CES 2026 hub.