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A new user signing into a Microsoft account-enabled website is first redirected to the nearest authentication server, which asks for username and password over an SSL connection. Users' credentials are not checked by Microsoft account-enabled websites, but by a Microsoft account authentication server. Microsoft account allows users to sign into websites that support this service using a single set of credentials. In 2012, Windows Live ID was renamed Microsoft account. In August 2009, Expedia sent notice out stating they no longer support Microsoft Passport / Windows Live ID. Examples of sites that used Microsoft Passport were eBay and, but in 2004 those agreements were cancelled.

Microsoft had pushed for non-Microsoft entities to create an Internet-wide unified-login system. In July and August 2001, the Electronic Privacy Information Center and a coalition of fourteen leading consumer groups filed complaints with the Federal Trade Commission (FTC) alleging that the Microsoft Passport system violated Section 5 of the Federal Trade Commission Act (FTCA), which prohibits unfair or deceptive practices in trade.

The privacy terms were quickly updated by Microsoft to allay customers' fears. In 2001, the Electronic Frontier Foundation's staff attorney Deborah Pierce criticized Microsoft Passport as a potential threat to privacy after it was revealed that Microsoft would have full access to and usage of customer information. In Autumn 2003, a similar good Samaritan helped Microsoft when they missed payment on the '.uk' address, although no downtime resulted. The payment resulted in the site being available the next morning. A Linux consultant, Michael Chaney, paid it the next day ( Christmas), hoping it would solve this issue with the downed site. The oversight made Hotmail, which used the site for authentication, unavailable on December 24. In December 1999, Microsoft neglected to pay their annual $35 '' domain registration fee to Network Solutions. As a consequence, Windows Live ID is not positioned as the single sign-on service for all web commerce, but as one choice of many among identity systems. He then joined Microsoft in 1999 after his company was acquired and was its Chief Architect of Access and Identity until his 2019 retirement, helping to address those violations in the design of the Windows Live ID identity meta-system. A prominent critic was Kim Cameron, the author of The Laws of Identity, who questioned Microsoft Passport in its violations of those laws. Microsoft Passport received much criticism. Microsoft Passport, the predecessor to Windows Live ID, was originally positioned as a single sign-on service for all web commerce.

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