Is there something about this that I've missed that has something to do with the Microsoft acquisition? The same laws would have governed GitHub if they hadn't been acquired.
From an Open Source developer point of view, yes, of course. Open Source projects should not be hosted with them. Period. It completely betrays the spirit of the licenses the code is released under, which guarantees access to anyone, regardless of political, religious, etc.
It all depends on interpretation of the law, lobbying, stalling and the amount of bad press an actor can handle. Microsoft is a much older company and is likely to have stronger ties to the established government.