"Update License" command is causing confusion for existing subscribed (paid and activated) users, and it's not helpful.
Hello from Canada.
We are noticing the same problem on our computers... at home and in our office. So, this appears to be an unannounced feature being rolled out by Microsoft globally. And it's causing confusion among a lot of users.
At our office, our PC workstations received the February update for our 365 Office apps (Word, Excel, etc.). As a result, all workstations now all have an "Update License" command under the File menu. Our current 365 subscription has already been paid for and activated a long time ago. So, we are left confused by this "Update License" command. When staff tried to click on that link, they were asked to activate the software, which is PURE NONSENSE because our software is correctly activated. Our IT support team will be investigating. Microsoft Visio is not showing this command, yet.
Home PC laptops that received the February 365 update have also been affected ... they also now display the "Update License" command under the File tab in the 365 office apps. I renewed my 365 subscription last November, and it's already activated. So, why update the license? I'm the sole user at home.
Mac computers are also affected, even with the latest versions of macOS. The "Update License" command now under the app menu (i.e., Word menu, Excel menu, etc.). Clicking on this command creates the exact same problem found on PC's.
Here's what I see in Word...

I don't see the logic of having to update my license, when I paid for the subscription and made no changes, and the software is already activated. I didn't touch anything.
Anyway, the 365 apps appear to work anyway, without any issues, so far.
I'm guessing the support phone lines at Microsoft will likely be ringing off the hook for the next few weeks, as Microsoft deals with the backlash from this.
And one more thing...
Microsoft just announced Feb. 16 that it will discontinue Microsoft Publisher (PC platform) in October 2026. That's got a lot of long-time Publisher users really upset, especially those who subscribe to it individually, or who have it as part of the 365 subscription. The standalone version will not be affected and can be reinstalled later.
Rupertsland,
Canada