No, that's not what's happening. Microsoft is migrating these users to Wordpress.com, an existing hosted blogging service. They're getting accounts there and their blog posts are being imported. Microsoft isn't running Wordpress.org software.
It's really smart.
But that doesn't change the fact this platform is, from top to bottom, everything Microsoft has been criticizing and sabotaging for the past decade: GPL, Linux, MySQL...
It's like Google deciding to do search through Bing...