For example: If you bad mouth a friend, they might no longer be your friend. This isn't a punishment for your actions or a restriction of your freedom.
Will they also ban anyone who posts and Hindu swastika? Or the face of Che Guevara? Or anything related to ancient Rome? Or anything related to the Ottomans? And I could keep going and going and going.
I agree that is wrong, but I disagree on the grounds of contract law, not speech rights. I do think MS is well within their rights to prevent you from playing their game for any reason they want (other than membership in a protected class), but they should refund your money.
So the punishment should instead fall on...other people? Because that's exactly what the sort of "free speech" you are advocating it - a restriction on other people's own freedom of speech and association.
Freedom of speech doesn't mean that there's nobody physically preventing you from talking.