In January we had a first look at Onlive Desktop. The free iPad app provides a connection to a hosted desktop Windows environment, complete with Windows 7 and Microsoft Office.

Well, according to a ZDNet post today, Microsoft believes that OnLive is in violation of licensing terms.

Microsoft’s VP of worldwide licensing and pricing, Joe Matz, brought up OnLive specifically in a blog post explaining the “Delivery of Desktop-like Functionality through Outsourcer Arrangements and Service Provider License Agreements.” In this light-hearted, fun-filled post, Matz noted that “Some inquiries about these scenarios have been raised as a result of recent media coverage related to OnLive’s Desktop and Desktop Plus services.

Additionally, the analyst firm Gartner raised questions regarding the compliance of these services last week. 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.”

Whether being “properly licensed” will cause the free app to go to a for-pay model is unknown, and OnLive has made no comment about Microsoft’s concerns at this time.

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