Because Microsoft takes its commitment to help protect the entire Windows ecosystem seriously, we’re updating the IE7 installation experience to make it available as broadly as possible to all Windows users, blogged Steve Reynolds, a Microsoft IE program manager.

That will now include users of counterfeit copies of Windows XP and Windows Server 2003.

Microsoft does have good reason for dropping WGA from IE7. The security feature has reportedly caused millions of Windows users to unintentionally and incorrectly be reported to Microsoft as software pirates. Microsoft has even been sued over it by a student in China.

WGA works by running an OS validation test on a user’s computer before it a download of IE7 is permitted.

IE7, touted by Microsoft as its most secure browser yet, was quickly adopted when it was first released almost a year ago. And while Microsoft continues to dominate the browser market, with a 77.9% share of IE6.X and IE7 combined, it is seeing increased competition. Firefox 2.0 now has 13.7% and is growing at a faster pace than IE7, according to market researcher Net Applications. Safari, Opera and others are also chipping away.

Indeed, Microsoft’s combined market share is slowing: a year ago it had an 81.3% share.

The latest version of IE7 also includes some minor new features. The menu bar is now visible by default and the online tour has updated how-tos. Also, a new MSI installer promises to simplify deployment for enterprise IT administrators.

Our View

Microsoft’s decision to expel WGA will certainly attract more pirated Windows users – and there are a lot of them out there – to IE7. And this probably will help bump up its market share.

But by getting rid of WGA, Microsoft also may succeed it attracting more technically-savvy computer users, who are, as a general rule, wary of programs like WGA.

It’s worth noting that when Microsoft initially announced IE7 would not be available to users of pirated Windows, it was criticized by some industry analysts for not helping protect all Windows users.