The other main concern about WGA is from privacy advocates. WGA purportedly sends data back to Microsoft on each boot of the machine and it is unknown what this data is or why it does this. It has clearly annoyed enough people that the main discussion on WGA is how to disable or crack the program. One site which was mentioned in a article on C|Net News was forced by Microsoft to remove the links to the cracks they had posted, but a simple Google search will turn up others.
However, now, a popular program for removing background and foreground annoyances in Windows XP, XP-AntiSpy, has included a function for a work around to the WGA issue. The program now has an option included in it's latest version to "Disable [the] WGA check at logon" which it describes as:
If you see this setting it means you installed the WGA check utility through a windows update. This check utility contacts the microsoft website everytime you logon to your Windows OS. If you don't want that to happen, disable this setting. If you want to get this setting back to work you have to install the WGA update again.
I'm unsure exactly what it does to disable the WGA check, but it is either a registry hack or it somehow uninstalls the utility. XP-AntiSpy has many other useful functions for privacy and security, such as disabling the automatic sending of data back to Microsoft in the form of error reports, Windows Media Player data, and it's time server. It allows users to completely uninstall MSN Messenger, which is otherwise unremovable.
Hopefully, Microsoft won't pressure the publisher of the software (who seems to be located in Germany) to remove this feature of the program, as it is an extremely needed one.
Download XP-AntiSpy 3.96-2 English
UPDATE 9/5: I've come across another program that has a similar function to disable the WGA Notifications. It's called RemoveWGA and simply disables the data that the WGA tool sends back to MS, but doesn't have any effect on the authentication of XP's validity.
Enables you to remove the Microsoft "Windows Genuine Advantage Notifications" tool, which is calling home and connect to Microsoft servers every time you boot (pilot version), or every two weeks (current release).Source
Once the WGA Notification tool has checked your OS and has confirmed you had a legit copy, there is no decent point or reason to check it again and again every boot. Moreover, connecting to Microsoft brings security issue for corporate networks, and privacy issues for everyone. It is also unclear which information are transmitted (Microsoft published an official answer, but an individual study brought some questions). All of that, along the fact that Microsoft used deceptive ways to make you install this tool (it was told you it was an urgent security update, whereas it is a new installation giving you no extra security) makes me calling this tool a spyware.
Also, Windows Genuine Advantage Notifications is different than Windows Genuine Advantage Validation. RemoveWGA only remove the notification part, phoning home, and does not touch the Validation part. As the time I'm writting this, the Validation part is mandatory for some not critical downloads from Microsoft, but the Notification part is not mandatory at all, and you are able to install all of the security updates without installing this one. This may change in the future thought, I don't know what are the Microsoft plans.
Note : once the WGA notification is removed, the Automatic Update will bug you about installing the update again. This is normal, and out of the scope of RemoveWGA (since at this point, the WGA notification is uninstalled from your system). If you are concerned about tweaking Automatic Update to prevent Microsoft trying to push the update on your computer.