Microsoft's updated End User Licence Agreement terms and conditions let it disable any counterfeit software or hardware and, if you're running a Windows 10 computer, you've just agreed to them.
Section 7b – or “Updates to the Services or Software, and Changes to These Terms” – of Microsoft's Services EULA stipulates that it “may automatically check your version of the software and download software update or configuration changes, including those that prevent you from accessing the Services, playing counterfeit games, or using unauthorised hardware peripheral devices.”
This means that, if you use Windows 10, a Windows phone, or any of Microsoft's other services, Redmond can disable any games you've pirated or devices you've unlawfully hacked.
While it's incredibly clear what Microsoft means by “counterfeit games”, the wording “unauthorised hardware peripheral devices” is a little hazy. Does this mean Microsoft can now block uncertified PC or illegally-modified Xbox One and Xbox 360 controllers? Furthermore, Microsoft's EULA doesn't state if it will also disable other counterfeit software, such as cracked versions of Office or Adobe Photoshop, or if it only cares about pirated games.
I've reached out to Microsoft for a comment about these unanswered questions and will update you when more information becomes available.
Video game piracy, or “counterfeit games” as Microsoft puts it, has been a big issue in PC gaming for a long time. Many developers have sought to circumvent it by hard-coding impossible odds into their games, which are only solved by having a purchased activation code on your computer. The same issue is also now becoming prevalent on Android and jailbroken iOS devices. However, under Microsoft's new EULA, Windows 10 Mobile would be able to combat any pirated software a user loads onto their phone – potentially making it an attractive prospect for indie developers scared of having their work stolen.
Interestingly, Microsoft killed off its incredibly unpopular, DRM-heavy, Windows Live Games in Windows 10, and opted to support Steam instead. But, with these new terms and conditions, Microsoft has practically baked DRM into the core of Windows 10.