The device runs arbitrary code. It's trivial to have a module that runs locally, downloads a "wanted list" and returns a probability of match for each entry.
This functionality will almost certainly be implemented given how effective it would be in locating young males.
I can't tell if you're serious or not. "Almost certainly"? If this were true, why wouldn't every smartphone already have this? Turn on the front-facing camera and send a picture of the user to the FBI. We've had this capability for years, and the Xbox doesn't add much new to the equation.
Spyware deployed by law enforcement like Finfisher does capture and transmit photos and audio.
In terms of mass surveillance, only very recently has facial recognition been built into phones and penetration is still low. It is also easier to detect because of limited connectivity and conspicuous bandwidth and battery usage. But yes it will become almost as easy to do it on phones in the near future.
Given what we now know about surveillance the claim that facial recognition and gait analysis on the Xbox One will be used in mass surveillance shouldn't be contentious.
It's an easy sell: "NSA/FBI: If we had such a system deployed during the Boston bombing we could have found the perpetrators in a matter of hours instead of days."
"POTUS: What about privacy concerns?"
"NSA/FBI: The biometric data is stored on the users machines, we only query the Xbox network for individual suspects and return high probability matches, it's not mass surveillance at all!"
This functionality will almost certainly be implemented given how effective it would be in locating young males.