OnLive’s recently launched Windows based apps for iPad and Android tablets are being downloaded like something “revolutionary”. But Microsoft has locked horns with OnLive over violation of its virtual licensing agreement.

Microsoft has not stated at the moment how OnLine has violated the Microsoft licensing agreement. Our licensing terms provide clarity and consistency for our partners, ensure a quality experience for end customers using Windows across a variety of devices, and protect our intellectual property. It's important to us and to our partners that we're serious about issues of compliance. said Joe Matz, corporate vice president of worldwide licensing and pricing at Microsoft.

OnLive Desktop converts iPad into a Windows 7 tablet, giving 2 GB of cloud storage and full access to Microsoft Office and other apps. It also has a Plus version with full flash support and super fast Internet speeds, costing $4.99 per month. The premium version – OnLine Desktop Pro costs $10 per month adding more features to OnLive Desktop Plus.

OnLive Desktop is undoubtedly very popular for both business and home purposes. But, Microsoft is upset as OnLive is giving shared environment to every OnLine Desktop users regardless of the fact that many of them are accessing Windows 7 and latest Office version for free. Microsoft says that OnLive is not properly licensed to use Windows 7 on an app.

“Customers that want to work with partners to have them host Windows 7 in a Virtual Desktop Infrastructure solution on their behalf, can do so when the customer provides the partner licenses through the customer’s own agreements with Microsoft,” Matz said.

Microsoft’s policy is valid for desktop but with changes in mobile computing Microsoft's licensing policies has failed to keep up with these trends and needs to be addressed promptly.

We are actively engaged with OnLive with the hope of bringing them into a properly licensed scenario, and we are committed to seeing this issue is resolved, Matz further added.

It looks like OnLive is in danger of being sued. It’s also certain Microsoft will be updating its License agreement policy.

(Reported by Johnny Wills, Edited by Surojit Chatterjee)