I "applaud" this ill-thought-out plan which can only serve as an accelerator toward a liberative tipping point.
Of course, the "anything-for-shareholder-profit" decision makers at Microsoft will likely wake up and see that this is a bad idea in the long-run. In time, the "reduced functionality mode" will become minimal. Microsoft will continue to schizophrenically cry "piracy" whilst realizing internally that unauthorized sharing engages the network effect and thus the sustainability of their business as a whole.
In short, this move by Microsoft sells Microsoft out. The only question is - to what degree will they push the "Genuine Advantage"?
Hard, one hopes.