That argument doesn't really hold when the barriers of entry are so high. Believing that one of the biggest tech firms in the world is doing something undesirable and having a better idea that many people would in fact pay for is not the same as having the resources to become a unicorn with a huge global customer base that can practically implement that idea.

Plus, specifically for Microsoft, competing doesn't mean an alternative to Windows. It means an alternative to the entire enterprise stack, especially Office & M365.

Google hasn't enticed the big entrenched MS orgs to move over to Workspace, so if Google can't how can a smaller startup ever hope to accomplish that in the face of these behemoths that can just outlast them in a race to the bottom until they are insolvent or get bought by said behemoths?

Microsoft doesn't just sell an OS, or some services, they sell "IT in a box"