Microsoft hasn’t changed all that much. They don’t see Linux as an OS to run games or MS Office with. It’s not a consumer platform and never will be, it’s more of a server/container maaybe workstation system for a tech-savvy/developer/scientist. Its UI is meant to open terminals and text editors, not movie players or game launchers. Microsoft loves Linux until it leaves the business area and try to sneak into consumer market. There’s nothing stopping them from doing harm to desktop Linux with all their „love” to Linux the modern mainframe system that happens to be industry standard. They can still patent things and do legality tricks (like in HDMI forums), try to put Windows on devices where Linux could be competition (one Linux handheld console = 10 more new Windows handhelds), bind consumers with something only Windows can run (Xbox Gamepass?) etc

The MS distro you’re talking about already exists - it is called Azure Linux (recently renamed from CBL-Mariner).