Microsoft has many intelligent people who work there and certainly do many risk vs. reward calculations for each modification to Windows. From Microsoft's perspective, they have much more control over the OS when everyone's linked to a cloud account. I morally disagree with that approach, but the security issues with Windows come from unpatched systems. They tried to win over software developers by creating WSL, but the privacy- and security-minded software developers never really bit.
Also, consider that Microsoft's future is obviously pivoted toward cloud infrastructure. Yes, they smartly have other ventures, but all those ventures will rely on Microsoft cloud infrastructure in some way. Server farms are a much better business model, from Microsoft's perpective, especially because it pulls Microsoft into the domains of true wealth: land acquisition, energy production, and data mining.