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I can see why MS went with UTF-16. As someone who had experience from before that era, and comes from a non-English culture, before UTF-16, most people used crazy codepages and encodings for their stuff, resulting in gobbledygook once something went wrong - and it always did.

If you run with the assumption that all UTF-16 characters are two bytes, you still get something that's usable for 99% of the Earth's population.

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UTF-8 wasn't a thing when the decision to go with UTF-16 was made.

UTF-8 became a thing shortly thereafter and everyone started laughing at MS for having followed the best industry standard that was available to them when they had to make a choice.

UTF-16 also didn't exist when the decision was made. It was UCS-2.

Microsoft absolutely made the right decision at the time and really the only decision that could have been made. They didn't have the luxury to ignore internationalization until UTF-8 made it viable for Linux.

Meanwhile a bunch of unix graybeards literally invented UTF-8 on a napkin, and changed the world.

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