No reasonable person at Microsoft considers Linux to be a threat on the desktop/laptop. No reasonable person at Microsoft considers Windows Server to be a threat to Linux on the server.
The on-premises infrastructure market has been and is projected to continue shrinking in favor of cloud spend.
Googling around one can find reports with names like "IDC Worldwide Operating Systems and Subsystems Market Shares report" that show how prevalent Linux is vs. Windows Server even in Enterprise IT.
I agree with your general sentiment, but just wanted to note that high-end embedded systems are also a very Linux-heavy domain. Even though from hardware side it might look similar to the mobile space (ARMs everywhere etc.) it is actually a completely different world.
EEE was more effective when Microsoft was completely dominant, but it's clearly still effective even when that dominance has diminished.
This move, for instance, will cause Linux users to depend on a proprietary, closed-source API entirely controlled by Microsoft. It's very bad for Linux and very good for Microsoft. It's a lever of Microsoft control, extended into the rival Linux system. Very easy to see how it effectively fragments the Linux ecosystem and allows Microsoft to forcibly pull users who come to depend on DirectX from Linux to Windows by manipulating this lever - reducing Linux support in the future, etc.
This is classic EEE, and the only way you can dismiss it is if you believe their PR, as apparently you do:
> they are no longer the 500 pound gorilla in the room, they're the "hey, fellow kids" oldtimer trying to fit in and get in on a piece of the action.
As the other comment explained, they are still a huge gorilla in spaces that are absolutely vital to Linux: server, desktop, and laptop.
Linux as we know it lives or dies on the server and desktop / laptop markets. Yes, Android is technically based on the Linux kernel, but it builds an entirely different ecosystem on top of it. The Linux ecosystem is only on the server and PC - exactly where Microsoft is competing.
Finally, the availability of this proprietary API will reduce the incentive for hardware companies like Nvidia to allow development of direct Linux support (drivers etc) for their products - which is what Linux really needs in order to survive, let alone prosper.