However, this is a reaction that didn't change anything: Windows Azure came after Amazon's AWS. The business of hosting your own software was already shifting to the cloud in a big way. Azure isn't even that successful anyway, being used more for keeping Microsoft's customers from switching from their own Windows servers to the more convenient EC2 (and it's children, like Heroku), which is cheaper and better if you're running Linux.

Microsoft also hasn't stopped attacking Open Source. They're just taking the indirect approach of threatening companies that rely on open-source, making them pay royalties, with the ultimate purpose being to make open-source software more expensive then their own alternatives. They also can't attack open-source directly, as other big companies rely on it (e.g. IBM).

Also, taking a good look at their strategy regarding Open Source, you can clearly see that it's all for marketing and defensive purposes (i.e. doing the minimal amount of work required for them to be considered open-source friendly, but without actually being so). For instance, they open-sourced ASP.NET MVC, but not Razor.