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According to Variety, they've pulled their sponsorship from the Fox show after executives watched the taping of it on October 16th. The episode was apparently the typical Family Guy fare, but Microsoft felt that the "riffs on deaf people, the Holocasut, feminine hygiene and incest" were "not a fit with the Windows brand."
Alright, fair enough -- and better to have realized it before the episode actually aired, of course. But on the other hand, had anyone bothered to watch the show before inking the ad deal?