There's already a precedent for massive backlash whenever Canonical or Red Hat build something proprietary or upstream a change that favors their business goals instead of the larger community. Given Microsoft's well-documented "Embrace/Extend/Extinguish" approach to open competition, no one would trust them.
However, you are referring to the OSS community that are aware of user freedoms, software licenses... putting the end user first!
I am talking about the majority of Windows users (even tech users) who have not touched Linux. This is still a large user base.
Imagine them getting their hands wet trying out Linux for the first time via WSL. Imagine them using a default distro that holds their hand with what they are familiar with.
Regardless what the OSS community thinks, if Microsoft played their cards right, they might have gained something not just in WSL space, but also Azure.
Loads of people, even today, purposely go with Microsoft products because the business they work for supports it. Its those places that may have given a Microsoft Linux OS the chance for some percentage share.
There are people out there that are all in on Microsoft and do not care about licensing or Free/Open vs Proprietary. Some people just want to use what they are comfortable with and continue to push whatever their job covers. If there is a reason to use Linux, they likely would be happy to use a "Microsoft Distro" to keep things connected.
- The OSS Faithful, who mostly ignored it and didn't count it toward "The Year of the Linux Desktop" - The normal folks, who use it without knowing anything about the underlying Linux baseline
This distinction is baked into the design of the OSS movement. The goal is to build usable computing that doesn't depend on a corporation (though alliances may be made at times when incentives align), and any corporate encroachment is fairly seen as antagonistic to those goals.
All that being said, none of this really serves Microsoft. They have a fantastic OS kernel and hardware support already (even if they throw crappy UX on top of it), and their chief differentiator is their long tradition of backwards compatibility. This locks enterprises and users into their ecosystem, and pushing a Linux distro would only give customers an opening to look elsewhere.
It has to serve Microsoft one way or another. They have changed their tune with Open Source since 2010 (ish)
A number of their software/tools have eventually supported Linux as well as Windows. dotnet is a great example of this. dotnet core was released around 2016.
Why did they do that? My guess is because of Azure to increase their user base. The option for a Linux VM as well as Windows.
Personally I do think they have a 'master plan' within the world of Open Source. It might not be to eradicate it but to gain a monopoly over it.
I think they have accepted they cannot beat Linux in an simple OS/Kernel war. However, they can control Linux with everything else needed for it to be usable. With the amount of money Microsoft can throw at it, they "could" run tactics for users to use Powershell instead of Bash. To use SQL Server instead of MySQL/MariaDB/Postgres. To use dotnet instead of Java/Go. This can be done without people realising its orchestrated by Microsoft.
This sounds laughable to a typical linux guru but we are getting closer the "the year of the linux desktop" and many that do switch are pure Windows users. If Microsoft play their tactics well, these people will want to take their Windows knowledge with them rather than learn the linux way.
This brings us back to WSL.
Microsoft made it extremely easy to install Linux thanks to WSL. You think how many IT users there were that only used Windows all their career. Since WSL that number has shrunk a lot!
Imagine them using Linux for the first time via WSL:- "Oh.. awesome. I can still use Powershell! I wonder if I can install SQL Server. Probably can with Docker! Microsoft have made it rather easy for me thanks to their own distro. I might use this distro when I create a VM in Azure next month"
We shall see.