[Update: Microsoft has issued a response to the kerfuffle surrounding the incident this morning, which reads as such:
"The comments in question during the Killer Instinct demo were not scripted. The demo was meant to include friendly gameplay banter and there was no ill intent."]
Microsoft caused a bit of a storm during its Xbox One press conference during a particularly awkward moment in the stage demo.
The problem arose when one party, a man, told the woman he was virtually beating to, "Relax, just let it happen, it'll be over soon." This blew up on Twitter and other social networks, as people questioned whether or not they'd just heard an inappropriate joke.
The "joke" has already been isolated and uploaded to YouTube, while NeoGAF has a big thread about it.
For what it's worth, I doubt this was an attempt at a joke, just a very poor choice of words that will no doubt surprise that guy as soon as he logs onto Twitter next. Also, they did have the woman in question flip it around and beat him -- albeit in a moment just as scripted as everything else, and pretty patronizing to boot.
Uncomfortable, yes, and very unfortunate. Not intentional, however. Just stupid.
None of this takes away from the fact that these kind of canned attempts to look fun and cute onstage are embarrassing, and need to go away. Forever.