Update, June 23 6:00AM PDT: Microsoft updated its original post, adding some new details and raising more questions. I've highlighted a few of those changes in this post and have asked Microsoft for clarification on other issues.



In the always confusing world of Microsoft licensing, there are two sets of rules.

One is written down in license agreements, drafted by Microsoft's large legal team, with separate terms for PC makers and end users. These combined terms are extremely specific about the rights and responsibilities of every party to the license agreement. They are aimed primarily at Microsoft's commercial customers and its PC-building partners, who account for more than 98 percent of all revenue from Windows desktop licenses.

The other set of rules is unwritten, for the most part. But its terms are fairly easy to deduce. They are intended for hobbyists, enthusiasts, and IT pros who like to tinker with Windows and PC hardware. Microsoft's TechNet program was a long-running gift to this group, offering thousands of dollars' worth of Microsoft software for a few hundred bucks.

The Windows Insider program is being run in that same spirit.

Every once in a while, Microsoft actually makes a public statement tacitly (and carefully) acknowledging those unwritten rules. That happened this week, with an announcement on Microsoft's official Windows blog outlining what's next for registered members of Microsoft's Windows Insider program:

Windows Insiders running the Windows 10 Insider Preview (Home and Pro editions) with their registered MSA connected to their PC will receive the final release build of Windows 10 starting on July 29th. This will come as just another flight. I've gotten a lot of questions from Windows Insiders about how this will work if they clean installed from ISO. As long as you are running an Insider Preview build and connected with the MSA you used to register, you will receive the Windows 10 final release build and remain activated. Once you have successfully installed this build and activated, you will also be able to clean install on that PC from final media if you want to start over fresh.

One thing you'll notice if you read that section carefully is that it doesn't contain any legal language. In fact, the word license doesn't appear anywhere in the post. The June 22 update, however, does contain that word: "This is not a path to attain a license for Windows XP or Windows Vista systems."

Update, June 21: Via Twitter, Tom Warren of the Verge points out that the post was edited overnight to change the wording, removing both references to activation. Here's a comparison of the changes:



Those edits, of course, simply muddle the description and were clearly added at the insistence of one or more of the aforementioned lawyers. In fact, the last sentence contradicts everything that came before it in the paragraph. I am confident that no change is going to be made to the delivery and activation servers for Windows 10. But at least the folks in L&C are now happy.

It's also worth noting comments on that post are closed, which prevents customers from asking for clarification.

Update 2, June 21 12:15PM PDT: On Twitter today, a day after these legalese changes were made, Microsoft's Gabe Aul confirmed that registered members of the Windows Insider program who upgrade from a clean install of the preview edition will end up with a fully activated copy of Windows 10.

The updated post contradicts that language:

If your system upgraded from a Genuine Windows 7 or Windows 8.1 license it will remain activated, but if not, you will be required to roll back to your previous OS version or acquire a new Windows 10 license. If you do not roll back or acquire a new license the build will eventually expire.

It's no accident that the original post makes no mention of the Windows license. Instead, it's a reflection of the fact that those unwritten rules have to remain unwritten. So, with a wink and a nod, here's what it means to individuals who aren't PC builders or part of an enterprise network:

Yes, anyone who signs up for the Windows Insider program and installs a preview build will receive the final release build automatically, with no hassles and no registration required. (Anyone running Windows 7 or 8.1 should see the "Get Windows 10" prompt.)

Yes, that copy of Windows 10 will remain activated, even if it was installed clean with no trace of any previous Windows version to be found.

Yes, you will be able to clean install Windows 10 on that PC from the official media if you want to start over fresh.

And if there's a technical conflict with the license agreement terms, you can relax. Microsoft is happy to have you on Team Windows.

Preview builds that are installed from an ISO rather than as an upgrade to a previously activated Windows system will still be activated, but those builds will eventually expire. You can continue in the preview program and continue receiving new builds, in the Insider Fast or Slow ring, and that expiration date will continue moving out.

In theory, you can remain in the Insider program indefinitely. From the updated blog post: "Since we're continuing the Windows Insider Program you'll be able to continue receiving builds and those builds will continue to be activated under the terms of the Windows Insider Program."

Why is Microsoft doing this? I can think of a billion reasons.

Microsoft's stated goal is to have Windows 10 running on a billion devices within the first three years after this summer's launch. To reach that huge number, they need to convince hundreds of millions of current Windows users to upgrade.

Asking people to pay means most will say no. So the upgrade is free to the overwhelming majority of current PC users.

You could think of it as a reward for the millions of people who have participated in the Windows Insider program, but there's really a much more practical reason: It simply isn't possible to do any kind of meaningful license check on individual PCs, and any attempt to do so would just cause friction. Likewise, activation hassles cause friction.

Friction means people get frustrated and cancel the upgrade. Friction is not consistent with getting a billion Windows 10 users in the next few years.

So the new rules are written with the expectation that activation will be ridiculously easy. If that allows a very small number of Windows enthusiasts to get free copies of Windows 10 that they're not technically entitled to, that's a fair exchange for absolutely minimizing the friction on those upgraders who meet the technical qualifications.

How many "freeloaders" will be able to use this so-called loophole? The number is downright tiny, a fraction of a blip on Microsoft's balance sheets. (See the chart in this article if you don't believe me.)

Any homebrew computer builder who puts together his own PC and has been running the Windows 10 preview on it gets a nice little gift. Happy Birthday!

Likewise, Microsoft is offering every Mac owner an opportunity to try out Windows 10 and keep it for free if they like it. Just install a preview release now, either in Boot Camp or in a virtual machine, and you will get an automatic, fully activated upgrade to the final edition when it is released. No strings attached.

If you like to tinker with virtual machines, you can do so with ease as well.

Microsoft is leaving some money on the table, obviously. But the amount is, quite literally, a rounding error for its Windows business, and having a gargantuan user base is more important than that puny revenue.

So why not just say, "Windows 10 is free"?

Because it's not.

Businesses still have to pay for their Windows Enterprise edition licenses. PC builders still have to pay for their OEM copies. End users pay, indirectly, when they buy a new PC from one of those OEMs.

Yes, in theory a business could pick up a hundred "naked" PCs (no operating system installed) from a local system builder, install the Windows 10 Pro preview edition on each one, and then drop out of the Insider program after the final, fully activated version arrives. At $140 per copy, that's a pretty fair chunk of change. But while those machines would be properly activated, they would not have valid licenses. And when (not if) Microsoft shows up to conduct a licensing audit at that company, the consequences will be unpleasant.

I suspect Microsoft's lawyers will include language in the final license agreement that prevents those "creative" deals from cutting into the core Windows business.

License terms for a new Windows edition don't typically appear until the very last minute. The broad outlines rarely change, but Redmond's lawyers like to throw in one oddball change just to mix things up.

At the moment, there's only a preview license agreement in place, so there's no telling what surprises we'll find this time around.