The most frustrating thing is how they can always be relied on to come up with the most cack-handed solution to anything. Shit-talk can be funny, for example when two players are clearly having fun having a wordplay showdown and amusing the lobby, and on the flip side hearing other players can be extremely frustrating without swearing or even talking being involved, for example when some moron has their mic constantly on and the gain turned high enough that I'm treated to an extra helping of the game music as well as the background sound of slamming doors and the yammering of their neglected family.
The catch all solution is to make in game muting of players quicker and easier; add options that allow me to quickly mute "all players talking right now", "Entire lobby" or even a setting that by default mutes everyone in every lobby unless I specifically unmute them. There are plenty of games where I could happily never speak to another player.
But no, the Microsoft way is to come down hard on anyone who says fuck.