New York Times reports Microsoft is not allowing users to have the word “Tibet” as their usernames either as a whole word or part of a another word.
A user told
New York Times that Microsoft is not allowing the term “Tibet” in the username for their e-mail accounts in Live.com, Hotmail.com and MSN.com. New York Times checked to see whether it is true or not, it got the same results as the user reported it first. I tried the same with similar results.
When you enter the term
Tibetisgreat@hotmail.com, Microsoft says the username is not available as shown below:

Cgullworld.blogspot.com Microsoft bans the word Tibet in Live account.
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But when I tried
DalaiLama1@hotmail.com, Microsoft allows it however.

Cgullworld.blogspot.com Microsoft allows the word 'Dalai Lama' however.
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New York Times speculates that Microsoft is trying to please the Chinese regime by not allowing the word “Tibet”. The article rightly asks:
But would the Chinese regime really feel threatened by the creation of, say, ILoveTibet@hotmail.com? And even if it did, would Microsoft really agree to help perpetuate that insecurity?
Microsoft responded to New York Times and said that it doesn’t allow usernames that conflicts with companies. For example it doesn’t allow the word “Tib” in the username so that it doesn’t cause confusion with TIB Bank in Florida and also to protect users from those not affiliated with TIB Bank (to stop phishing scams). But in this case Tibet is the name of the place, how can the user get confused with it and think that the user represents Tibet?
After the article was reported, Microsoft changed its policies by changing the statement from “contains a word or phrase that is not allowed” to just “not available” in order to minimize the controversy.
I tried the same trick in Google to see whether they also comply with China, but it worked as shown below:

Cgullworld.blogspot.com Gmail allows the word 'Tibet' in the username.
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It is absurd to ban the word “Tibet”, everyone loves something why can’t they love Tibet? If Microsoft bans the word “Tibet” then they should ban “China”, and other countries and places also.