Microsoft has added a feature to its Hotmail email accounts, now called Windows Live Hotmail,  where users can report that a friend’s account has been hacked.  It’s a security measure that comes at a time when data breaches and personal information are certainly threatened, with various companies and services making changes to reassure consumers.  This particular update is an indirect method of gaining intelligence around cyber-attacks, leveraging the network effect towards improving web safety.

“Microsoft noticed that in many cases when an account is hacked, friends notice it long before the user does, simply because of the spam and phishing attempts sent to people on the user’s contacts list,” said Dick Craddock, group program manager at Hotmail, acknowledged in a blog post that account hijacking is “a big problem” at Hotmail, and that a better approach to countering it was needed.

When it comes to security, Hotmail is out to protect its users from hurting themselves with two new features.  The first is a feature that allows users to quickly report a friend’s account as hacked, and the second tool is to  block users from employing common passwords.

The first feature will allow people who receive suspicious email from a friend to report the sending account as hacked. When the user reports an account as hacked, Microsoft will alert their webmail provider, regardless of who it is. This means that Microsoft will report to Google and others when their users’ accounts are likely compromised.

At first, Microsoft was only able to let users report fellow Hotmail accounts as being compromised, but it decided to add support for Gmail and Yahoo Mail as well. While neither of these can make the reports, Hotmail users can report Gmail or Yahoo accounts that they believe have been hacked. Microsoft will forward those reports to Google and Yahoo to deal with.

The second feature speaks to the savvy of the average Internet user (or lack thereof).  Hotmail will soon prevent the use of common words or phrases when you sign up for an account or change your password. If you’re already using a common password, you may be asked to change it to a stronger password.  This means that anyone creating a new Hotmail account or changing the password of an existing account won’t be able to use obvious and common passwords like “123456” or “password.” The system will also block common phrases.

In other Microsoft news, Microsoft has “unintentionally” leaked its own social networking platform. Whether this is an attempt to ride the current hype wave around social search, or a genuine mistake on the part of some IT guy, Fusible, which picked up the story, discovered that the name Tulalip is also the name of a Native American tribe located near Redmond, Washington, Microsoft’s home turf.