I'm not sure Ballmer would not have allowed that. Linux in WSL under Windows is not a threat to Windows; it's absence was beginning to be a threat, as a generation (both of people and technologies) was Linux native and needed (or at least it is way more convenient) it locally to do their work. So it is basically either MS did WSL, or people were going to migrate away.

And at least they did WSL cleanly, meaning that they do not rely on proprietary extensions for e.g. Linux projects in VS but simply use ssh. Maybe Ballmer would have wanted to attempt a proprietary lock in (the extend part) -- I'm not sure this would have worked in the context I described, because one important source of the need is people working on remote systems which are real native Linux, so they needed standard things anyway.

while that is indeed the quote, I think he primarily was referring to the GPL.

(in before the Linux/GNU copy pasta)