Following NBC Universal’s abrupt removal from the iTunes Store, which followed a breakdown in discussions between the television network and Apple regarding pricing and piracy, competitors Microsoft and SanDisk have been working to develop anti-piracy technology to remedy one of the network’s concerns. Both companies are selling NBC video content at prices similar to Apple’s pricing for the iTunes Store.

According to a New York Times report, NBC Universal digital distribution president J.B. Perrette claimed that Microsoft is developing a “copyright cop” to be installed in Zune devices, that will supposedly be capable of removing pirated videos rather than playing them. While the system is “still in development and its exact form has not been set,” NBC plans to create “filtering technology that allows for playback of legitimately purchased content versus non-legitimately purchased content,” and “is also working with Internet service providers like AT&T to put similar filters right into the network.” Microsoft confirmed in the report that it is exploring anti-piracy measures with NBC, but would not divulge additional details; the Times notes that the Zune’s lagging market position relative to the iPod will make it difficult for Microsoft to add consumer-unfriendly features.

Updated: Contrary to the NY Times report, Microsoft’s official Zune blog claims that the company has “no plans to add content blocking features in Zune,” and suggested that NBC was “expressing hopes.” Thanks, Justin.