It's more than just licenses, though. With this program, Microsoft is going to be providing a service in addition to simply putting out their build of the Linux

It's more than just licenses, though. With this program, Microsoft is going to be providing a service in addition to simply putting out their build of the Linux kernel: the userspace, libraries in it, and associated cloud services. They can put as little or as much they want in these service layers, and these service layers are free from copyleft license restrictions (little embedded Linux software is AGPL, and their cloud services are almost certainly not going to be AGPL). Now, I'm not saying they're going to do this, but, if they wanted to, everything above the kernel is very easy to "extend" in a capturing effort. Indeed, Ubuntu and systemd have successfully extended layers above the kernel to great success. It's a good thing that both are open source (and that systemd is LGPL), but that was not a very neccessary requirement to the extensions they have built.