If you read the thread, you will see that it’s not the case. Just change user agent in the Linux browser and it works — with nice resolution.

That's because the person on the original thread has the non-free codecs installed and whatnot. @danpalmer is right to point out that their availability is not something you can rely on. Although this is definitely the wrong way to check it.

I'm not sure Microsoft is deliberately making things worse for Linux users, either, but the fact that a better implementation is both possible and straightforward enough suggests that cross-platform performance is not quite the priority that marketing materials make it out to be. We're not talking rocket science here. If this is indeed not specifically about Linux, then either Xbox Cloud's code review practices are at best questionable, or the paradigm that best describes their approach to client-side performance is #yolo.

What would be the motive? Forcing Linux users to buy a Xbox or a Windows license? I don't quite buy that: it's such a small market that I venture they'd rather have people be able to play at all via Xcloud and sell a Game Pass Ultimate subscription.

Also remember that Xcloud is still beta, with a feedback form after every session, and probably some telemetry. While it would technically not be rocket science to detect codecs, I'm more inclined to think that this is a blanket denylist because enough reports have come up and showed that using better codecs/higher quality produced a subpar experience even though codecs are reported as supported (which might come from a zillion reasons such as codecs falling back to software decoding, or underpowered hardware, and both could be true for PC, Chromebooks, and Android).

I did read the thread, and as the other commenter has suggested, most users do install non-free codecs which is why this works, but also why Microsoft may have used the user agent as an indicator.