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A number of countries have laws protecting consumers and their right to sell used products (including the US as long as the product comes from the US), and while the install system might seem like a loophole, it’s just as likely some courts in some countries might not see it that way.
There are also laws that only citizens can be hired as a workforce. But Microsoft flouts it all the time as many other companies do. I doubt anyone will legally challenge Microsoft. And if they do, courts may find the matter of a game console too ridiculous to ‘protect’.
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