Microsoft tweaks activation rules for the Windows 10 Anniversary Update

With the Windows 10 Anniversary Update nearly ready, Microsoft this week announced a seemingly minor change to its activation process. Under the new rules, it should be easier to reactivate Windows on a PC after major hardware changes. But is there more to the story?
Written by Ed Bott, Senior Contributing Editor

Microsoft this week announced a seemingly minor change to its activation rules for Windows 10, effective with the Anniversary Update coming this summer.

The announcement was buried in the release notes for build 14371 of Windows 10, released a few days ago. Those notes were published in the Feedback Hub, which is available only to registered members of the Windows Insider Program running a Windows 10 preview edition.

As with all things that are related to licensing, the details are confusing and it's easy for even longtime Windows watchers to draw the wrong conclusions or to dream up conspiracy theories.

Here's the short version: Beginning with the Anniversary Update, version 1607, you'll be able to link a Windows 10 digital license with a Microsoft account. This linkage occurs automatically if you're signed in with a Microsoft account when you upgrade to version 1607.

For anyone else, including those with local or domain accounts, this step is optional. In any case, it applies only to those who have a Windows 10 digital license. That group consists primarily of those who took advantage of the year-long free upgrade offer that ends on July 29, 2016.

This new feature doesn't change the fundamental way that Microsoft's activation servers work. The process of activating Windows relies on a unique installation ID, which is based on a hash of information taken from the hardware on which Windows is installed. That hash is reportedly not reversible and is not tied to any other Microsoft services. It identifies a specific device, not a person.

When you use a product key to activate Windows for the first time, that installation ID is recorded in the activation database alongside the product key you entered with the installation. Later, if you need to reinstall the same edition of Windows on the same hardware, with the same product key, activation happens automatically. (Conversely, if you try to use that product key on a different machine with a different hardware ID, you'll probably be denied activation.)

But those free Windows 10 upgrades don't use a product key, so they require a different way to store the details of each upgrade license on the activation servers.

During an upgrade, the Windows 10 setup program confirms that the underlying copy of Windows 7 or Windows 8.1 is properly activated. During the free upgrade period, the Windows activation servers used that confirmation to generate a Windows 10 digital license (during the upgrade period, Microsoft referred to this as a "digital entitlement"). That digital license is stored in the activation database with your hardware-based installation ID and details about the version you just activated (Home or Pro).

If you wipe that hard disk completely, boot from Windows 10 installation media, and install a clean copy, Windows tries to activate automatically, using an installation ID that it sends to the Windows activation servers. Because the underlying hardware hasn't changed, the installation ID is identical to one stored in the activation database, and the digital license is activated automatically.

For most PCs, most of the time, that process just works.

But there are two situations in which reactivation can stumble.

First, if you make major hardware changes. The algorithm that generates the installation ID is a closely guarded secret, but I can confirm from years of testing that it is extremely tolerant of minor changes. If you add a hard drive, upgrade a video card, or increase memory, you almost certainly won't trigger a change in the installation ID.

Changing the motherboard, however, generates a new installation ID. Under Microsoft's sometimes Byzantine licensing rules, your license is valid if you replace a motherboard because of hardware failure. You need a new license if you chose to upgrade the motherboard, because you're essentially building a new PC.

Under the existing rules, there's no way to prove that you have a digital license for that PC. You have to call the telephone activation line and plead your case with a support representative.

That's where linking the digital license to a Microsoft account comes in. After a motherboard replacement, you can use the new Activation Troubleshooter to view digital licenses associated with your Microsoft account and identify the device that has the replacement motherboard. That action transfers the digital license to the new installation ID.

The second situation where the link to a Microsoft account might help is on a PC that has more than one license attached to it. That situation might apply if you purchased a PC with Windows 10 Home installed by the OEM and then upgraded to Windows 10 Pro during the free upgrade period using a product key from a retail copy of Windows 7 Professional, for example.

In that situation, a clean reinstall of Windows 10 from the manufacturer's recovery media might result in the Home version being installed and activated. The procedure for upgrading to Windows 10 Pro is far from obvious, involving generic product keys that aren't officially published. Here, too, being able to link that Windows 10 Pro license to a Microsoft account makes it possible to identify the correct digital license.

Microsoft says the new feature to link a digital license to a Microsoft account is in Windows 10 build 14371 or later. I have one PC that performed this connection automatically. I have not yet been able to test the manual linking process.

One concern that some will have is that linking installation IDs to a Microsoft account fundamentally changes the anonymity of activation. That's not likely to go over well with the contingent that believes Windows 10 telemetry is actually a secret spying program.

I am sure there will be additional conspiracy theories as well. In fact, I expect to read a few of them in the comments to this post.

I'll have more details after I get the chance to test this feature more fully.

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