Hotmail and Outlook.com store plaintext passwords (i.imgur.com)

http://i.imgur.com/LlqAw.png

I have a Hotmail account and its password is more than 16 characters

I wanted to login to Outlook.com with my hotmail username and password and I got this error

When I just entered the first 16 characters of my password it logs in!!

This shows that passwords are stored in plain text because if there were hashed there was no way to know what is the first 16 characters of my password!