Msg 40636 Cannot use reserved database master.
Applies to: SQL Azure Database V12.
 
Problem Description.
 
After upgrading a SQL Azure Database server to V12 you run the following 
statement and notice the master database does not have compatibility level 130.
 
SELECT [name], compatibility_level
FROM sys.databases
WHERE [name] = 
'master'
 
You then try to set the compatibility level of master database using the 
following statement:
ALTER DATABASE [Master]
SET COMPATIBILITY_LEVEL = 130;
GO
but you receive below error message:
Msg 40636, Level 16, State 1, Line 1
Cannot use reserved database name 'Master' in this operation.
Cause.
The compatibility level of 100 on the master database of the SQL Azure server is 
expected as mentioned on SQL Azure documentation:
"Databases created before mid-June 2016 will not be affected, and will maintain 
their current compatibility level (100, 110, or 120). Databases that migrated 
from Azure SQL Database version V11 to V12 will have a compatibility level of 
either 100 or 110. "
Source:
https://docs.microsoft.com/en-us/azure/sql-database/sql-database-compatibility-level-query-performance-130
The compatibility level of master database cannot be changed on SQL Azure since 
it is considered a reserved database.
To this day, we don't know of any benefit from running master database on 
compatibility 130 instead of 120 or 100.