The OS itself is free to download and install, the activation key is what costs money. So technically, installing Windows isn’t a “pirated product” unless you dupe the activation, at which point it is activated and doesn’t run into this issue.

Second, there are plenty of situations where a legitimate user of Windows may find themselves no longer activated. Switching motherboards due to hardware failure or upgrading their system comes to mind as a big one. Imagine having paid for Windows, your motherboard fails, you replace the motherboard, and it turns out you had an OEM version of Windows and can no longer use that key to activate Windows on the new motherboard even when the rest of the system is the same hardware!

So yeah, sure, surprised Pikachu face if you pirate something and it doesn’t have the full functionality. Whatever. But more than just that demographic would be negatively affected by this.