> Microsoft could ignore the regulators and keep doing business in the country
No it can't. You are immediately cutoff from payment and transaction systems and you have no legal basis for selling anything in the country.
On top of that, there's the obvious factor of being it very simple to completely block you online.
Another example, you may not be aware of it, but many companies can't do business in Europe or European countries. E.g. several US media outlets don't want to comply with European privacy laws.
If they can't do business in a country they can't, simple as that.
Even the rest of your comment is even more ridiculous.
A company trying to force its hand against legislation like that is a business-harakiri. You can't possibly think such stuff isn't looked upon by other business actors and governments.