A lot of prospective Microsoft employees have been hesitant to join the company due to policies about outside work (moonlighting). Many large companies (particular tech companies) have specific policies about engaging in outside work, and until recently, Microsoft had a similar policy.
From a policy point of view, it was reasonable (or at least, expected). Work completely outside the core business, for the most part, was allowed without any prior permission. Work that may be questionable required special permission. It was reasonably easy to get via an internal website, but still, presented a barrier for many people. After all, virtually anything related to websites, coding, technical writing, et. al. would likely require permission.
The good news is that Microsoft recently canned its moonlighting policy, replacing it with one similar to its blogging policy: "be smart." It's up to each employee to know what is a conflict of interest, and to avoid it. This is terrific because it simplifies process and keeps the burden of doing the right thing on the employee. Of course, the intent is still the same about avoiding conflicts of interest, but just like having a simple blogging policy, it makes a world of difference.
So, if you've held back applying because you couldn't pursue side work/hobbies without jumping through hoops, it's a good time to give that a second thought.