A runtime activation system uses a set of policies designed to provide a balance between backwards compatibility and ease of migrating existing (non side-by-side aware) applications to new runtime versions. The system chooses the runtime version to activate when an application runs or when a runtime application programming interface is invoked based on the set of policies. The system implements these policies by consulting compatibility data associated with the application indicating the intent of the author and level of side-by-side support provided by the application and/or global configuration data. Based on the compatibility data, the system chooses policies that are right in the most common cases, and easy to modify in less common cases. Thus, the runtime activation system allows applications to be flexibly configured to handle new runtime versions in a manner determined by the application author, a system administrator, or others.