Disclosure of bias: I work for Microsoft. I don't speak for my employer.
Windows Phone 7's chassis specification mandated that manufacturers include a hardwired LED that lit up when the front-facing camera is active. But Android did not mandate this (or much of anything), and so the Qualcomm Reference Device (QRD) didn't implement it. The QRD is important, because many low-end manufacturers bootstrap their product design with a QRD and make the minimum number of changes to arrive at a viable product. But manufacturers needed to do extra engineering work and add to the BOM to make a Windows version of their cheap Android products.
It eventually became clear that consumers weren't willing to pay any premium for Windows Phone's higher standard for privacy. (I'm not claiming this was the only cause of WP's failure in the market -- just one small contributing factor.) So we intentionally pared down later versions of the chassis specification to minimize the differences between it and the QRD, including removing this privacy LED requirement. In theory, this would have allowed manufacturers to churn out cheap Windows Phones as easily as they were churning out cheap Android Phones.
Of course in hindsight, that was all too little, too late. Android won the cheap phone market for a huge number of reasons, one tiny factor of which is that it didn't require a privacy LED. The moral I took away? If your products cost more because they're safer, your marketing needs to ensure you get credit for that. Safety isn't obvious to someone glancing at your product; you need to spell all it out for the consumer. And if you can't find a way to articulate it, then reconsider whether you really need that safety feature.