For the same reason everything is moving to being ad based - because ads pay more, and because the high income users who are willing to pay to get rid of ads are the most valuable users to show ads to.

Google and Facebook showed the way. Consumers see FREE service and it sets the market equilibrium. Retail Windows licenses were already a slim minority. Those who would buy Windows 11 LTSC for Home would be an even smaller group.

It's pretty easily available if you know where to look, and I hope they never close the free activation loophole.