MS already blocks pirate copies of Windows from updates, so this in itself is nothing new.
If MS wants to complicate the use of their products, let them. It will just give the Linux community more reason to develop better native Linux programs, and make Linux more attractive to the traditonal MS user. They're cutting their own throats with greed; not an unusual behavior at all for an overgrown,mindless corporation, is it?
Meanwhile, IBM and Novell have embraced Linux, and they each have more than a little influence in the PC world. Ultimately, MS will be forced to reduce software prices AND provide better products, or fade away and die. Gates knows it, Ballmer knows it, and the Linux supporters know it. It's possible right now to have a fully functional business running Linux, and applications that are all non-MS, and many businesses see the savings, and are beginning to switch.
The next five years or so should be interesting, in the OS arena.