How is that Nvidia can ban reverse engineering and for example Nintendo can't. I'm sure they would love to just say in EULA that sorry but reverse engineering Switch is prohibited therefore every emulator is illegal
Well, maybe they can't. This clause would probably not hold up in a lot of countries/courts. OTOH it would in others. It might take years of litigation to figure out.
So, if you want to work on this kind of thing, better consult a lawyer first. It will have a chilling effect and that's something.
Microsoft do make money from Linux though. For example, Microsoft SQL Server runs on Linux, and you can use Linux in Azure (both of which are part of their core business).
Microsoft's operating system accounts for a vanishingly small percentage of server hosting, and their deathgrip on personal computing is starting to slip. (Particularly as Android has already replaced Windows as the most popular operating system.)
Microsoft is well past "not worried", looking at "too late to do anything about it" in the rear view mirror, and barreling toward "cease to exist if they don't continue to stick the landing on interoperability with Linux and Android".
Microsoft's long term relevance plan counts on cloud tools on Linux and their Office Suite on every platform.
As someone who often runs apps on hardware the app was never meant to run on, it's not great.
There may be a unified Android / Linux package type coming, when more laptops are touchscreens and more phones are dockable workstations. But I doubt the Windows kernel will have much to do with either.