As someone who had worked on cloud gaming for a few years, I think using Linux is the right thing to do.

We used windows, and it was a disaster. Windows is not a multi-user system. User isolation is so difficult. Without user isolation, user A can access user B's data or login information, and it's difficult to clean up a seat's state without a slow reboot. We did lots of ugly hacks to make it work, as the OS is not open-sourced. Also, existing windows games don't support multi-users, the same CD key can only be used by one user. All these issues made virtual machine sharing difficult and hence resulted in very high cost.

The one thing done right by google is moving to linux and developing games specifically for cloud.