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I've heard $5B+ estimates for development costs for fuchsia and it's barely made a dent on the market.

The goodness of a kernel is somewhat determined by how much people decide to use it.

Aren’t device drivers compiled into the Linux kernel?

I would think that support alone would be worth more than 1.2B dollars in collective time spent ironing that out. I don’t really know but I am thinking their estimate is rather low for the cost to reproduce the Linux kernel.

Edit: missed the link to a paper for the estimate.

The kernel is one thing, but then you have all the library support and distributions and community and so on.