The EULA ominously warns that: "Before you activate, you have the right to use the version of the software installed during the installation process. Your right to use the software after the time specified in the installation process is limited unless it is activated. This is to prevent its unlicensed use. You will not be able to continue using the software after that time if you do not activate it."
What does this mean? Essentially, if you buy a license to the software from a reputable dealer, but choose not to transmit information to Microsoft, you forfeit your ability to use the licensed software.
What is interesting is not whether you have the right to use unactivated-but-properly-purchased software, but how Microsoft enforces its right. What Microsoft says is that the software will simply stop working. So, where is the proof that the software is not activated? Who has the burden of proof? What if you assert that you did activate the product, but Microsoft claims you did not? What if you attempt to activate the product, but Microsoft’s servers are down, or they provide improper information, or their servers are hacked and give you bad activation information?
What the contract states is that unless you can activate the product (irrespective of whose fault it is that you cannot activate), you forfeit your right to use the product, and therefore access to any of the information on any computers using the product.
The license is also silent on what happens after you fail to activate the product. Is there a mechanism for you to at least open the product to allow you to activate it, or do you get a Blue Screen of Death? Since their objective is to ensure that the product is activated, presumably they will allow you to at least get an internet connection and take you to an activation screen.
Once you activate the product, then you would assume that you are golden to go ahead and use the product, right? Wrong.
You see, even after you activate the software it will, according to the EULA, "from time to time validate the software, update or require download of the validation feature of the software". It will once again "send information about the...version and product key of the software, and the internet protocol address of the device".
Here's where it gets hairy again. If for some reason the software "phones home" back to Redmond, Washington, and gets or gives the wrong answer - irrespective of the reason - it will automatically disable itself. That's like saying definitively, "I'm sorry Dave, I'm afraid I can't do that..."
Unless you can prove to the satisfaction of some automoton that the software is "genuine", or more accurately, that under the relevant copyright laws that you have satisfied the requirements of the copyright laws and all of the terms of the End User License Agreement, the software will, on its own, go into a "protect Microsoft" mode. Besides placing an annoying "Get Genuine" banner on the screen, and limiting your ability to get upgrades, the EULA warns that "you may not be able to use or continue to use some of the features of the software". The EULA itself does not state which features these are, but the website advises that, unless you can show that you are genuine, you won't be able to use Windows ReadyBoost(tm), which lets users use a removable flash memory device; the Windows Aero(tm) 3D visual experince; or the Windows Defender anti-spyware program.
But the contract doesn't limit Microsoft to these disabling attributes. It just says they have the right to limit your ability to use features - pretty much any features they decide to at any date. And guess what. You agreed to it.