Would this actually happen? Would it effect Linuxes popularity? That's harder to predict.
What makes this different IMO from VMWare is that they are not creating a work that exists purely b/c of Linux, instead they a making a piece of software that allows their hardware to work with a Linux based machine.
I think those are two very different types GPL violation. One really does flout the GPL and exploit Linux kernel devs, the other I think is generally viewed as an enhancement to Linux, thus less interest in fighting it.
Linux would be hurt more by nVidia's absence than nVidia would be hurt by Linux's absence.
Linux could disappear tomorrow, and there are plenty of free Unix-like alternatives that easily fill the void.
If nVidia disappeared tomorrow, there are lots of Linux contracts that would simply stop (and most likely switch to Windows).
Now, you can argue ideologically, but part of the reason why Linux is popular stems from the fact that Linus was more pragmatic about licensing rather than RMS' dogmatism.
If you want to see what a world with a strictly enforced GPL without modules looks like, look at the device support for OpenBSD. A lot of Linux folks would be very upset being limited to that set of peripherals.
Maybe for the desktop, but not overall: Nvidia is heavily pushing supercomputing/machine learning and it can't afford to ignore Linux in this space (since Linux dominates).
If Nvidia were to abandon Linux, they would be gifting AMD a free come-back opportunity.
If for some reason supercomputer builders could no longer use the best GPUs in supercomputers, would they stick with Linux or would they follow the hardware and switch to a ⋆BSD on the compute nodes?
I have no idea what the answer would be, but my guess is it would hinge on 1) AMDs reaction, and the performance hit (if any) of switching to AMD GPUs on Linux and 2) the performance hit (if any) of switching the OS to *BSD
Going with second rate option simply doesnt work when you're spending hundreds of millions per machine on the high end.
I mean do you really think it told really be easier to port a thousand heavily optimized applications/libs CUDA to OpenCL than the handfull of librsties that dont alrady work with BSD from Linux?!