Right. I don't see why this is so far fetched. It gets MS/Windows branding/features on the machines, not some "other" Linux distro. Once people are using Windows only features, they can discontinue or raise prices or etc on the "other" linux distros.

It seems like you're talking about a Microsoft Cloud Linux distro, like Amazon Linux, rather than something related to Windows. Microsoft Linux makes sense, for similar reasons to Amazon Linux making sense. It doesn't relate to Windows, though.