Windows Live ID passwords were always limited to 16 characters—any additional password characters were ignored by the sign-in process. The minimum length required is 8 characters.

If you sign in to your Microsoft account, with a longer password, you might see the following error message:

"Microsoft account passwords can contain up to 16 characters. If you've been using a password that has more than 16 characters, enter the first 16."

This doesn't mean that your password has been shortened. But the same has been continued in Microsoft Account too!

In contrast, a Yahoo account password can be minimum 6 characters and maximum 32 characters and a Google password maximum 200 characters!