Perhaps to prevent users from closing the window or application inadvertently?
But is it also a distraction because the color of red stands out? Any insights?
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Red might be distracting but it also has a definite cultural association with "stop" or end, and that makes it intuitive right away.
Often intuition is more important than power, or even ease of use. This is why we still see anachronistic icons like diskette to indicate save - of course the argument can be made that such a button is not intuitive to the newest users.
It is worth noting that the button is only red for active windows, so it can also become a very visible indication of which window is in use when a large desktop is used, multiple monitors or any other situation where the screen is not populated by one maximized window.
Opinion wise I think any time intuition encroaches on long-term usability there should be a way to disable that feature, even if it is only accessible to more savvy users (as by then, those users have less need for the intuition as they are more familiar with the functionality).
I would imagine it's red because it is in close proximity to minimize and maximize, and it is a 'danger' button.
It's also a button people use quite a bit. I don't have any data, but I close windows far more often than I minimize or maximize.
Instead of color, I think it would be a better practice to place it farther away from the other window controls to avoid accidental clicks. I doubt Microsoft will change this in the near future because their users are used to its location.
I think this button is made to look differently from its neighbors to prevent accidental clicking, with the color red conveying an implicit warning not to use this button lightly.
By having it positioned at the very corner of the window, its color will not distract from the window content. Also, as this red button is a standard convention with Windows software since at least ten years (before XP, I believe it was grey like its neighbors), people are likely to have learned how to use it.