"the truth is 99% of people would rather just make a Microsoft account than have to learn and switch to a whole new OS."First, I am writing this reply in Pale Moon browser running on Arch (KDE Plasma), so I'm a pretty diehard Linux user and have been so for years. That said, I still use Windows as I'll explain.
You are absolutely correct, switching to Linux from Windows is still very hard for many people—likely the majority—for a multitude of reasons, there being too many to give full justice to here. Several stand out however, such as having to learn the idiosyncrasies of a new operating system and adapting to new apps that do not have the same feature set as their Windows counterparts, for those wishing to switch compatibility issues are still a significant headache.
Nevertheless, users within corporate environments usually find switching to Linux easier by virtue of having a more controlled set of applications as well as having access to training and helpdesk facilities. For example, switching from MSO/Outlook to say LibreOffice/Thunderbird ought not be too arduous, also their Linux environment is managed by their IT departments. On the other hand, home users and small businesses aren't afforded such 'luxuries' and have to manage everything for themselves. Unless one is technical or reasonably computer-literate converting can be not only challenging but also very time-consuming.
Clearly, Microsoft is aware of the resistance to change factor and is leveraging the fact to its full advantage. When it comes to switching from Windows to Linux I think many Linux users underestimate how important these differences are to Windows users. As mentioned, I still use Windows on a number of systems and I even balk at the changes between the way different Windows versions work at the GUI level let alone the differences between it and Linux (it's why on Windows I restored Quick Launch when MS removed it and why I use that wonderful program Classic Shell by Ivo Beltchev to make the GUIs of my different Win versions all look like XP). Suffice to say, I prefer the old Windows Task Bar to KDE Plasma's Panel; for me, it's ergonomically more functional (even after having made many tweaks to the former).
The same goes for certain important (well-loved) Windows applications, whilst some key programs such as LibreOffice are native to both Windows and Linux, others remain Windows-only apps sans native Linux equivalents but which are arguably substantially better any Linux program with the same or similar functions. No doubt, many Linux-only users will likely differ from that view but that's irrelevant, here it's the perception of Windows users that actually counts—if they cannot run their favourite programs on Linux (or close equivalents) then they will stubbornly resist changing operating systems. I say that from experience, I used to head an IT department and users can make management's life very difficult when forced to make changes against their will. Also, I'm reminded of someone at Microsoft whose name temporarily escapes me saying that the Win32 API was one of the company's most valuable assets. Very true indeed!
Putting a Windows hat on here with some examples, from my experience there is no equivalent or near equivalent native Linux program that is as good or as ergonomically functional as say the Windows file search program Everything, same goes for the excellent image viewer IrfanView, and to a lesser extent same for XnView (if necessary I can justify those claims). Similarly, when it comes to file managers nothing else comes close to Directory Opus in either Windows or Linux, if it were available for Linux I'd buy it immediately.
OK, Linux-only users will immediately retort "just use Wine and your problems will be solved". Right, Wine is great for many 'self-contained' programs but Wine's a pain and essentially incompatible with programs that make certain demands of the operating system outside of those normally handled (or not well implemented) by Wine. For instance, IrfanView allows the viewed image to be edited by an external image editor which here would likely be the native Linux version of GIMP. Attempting to get that to work from within IrfanView whilst running under Wine/Linux is a major headache, just check the many online requests from frustrated users who have been looking for a solution. Similarly, Everything's search relies on accessing NTFS's MFT (thus even on Windows it won't work in FAT32, simply forget any notion of using it with, say, Btrfs).
So we are back to the fundamental problem of incompatibility between Windows and Linux hence the many requests we've seen over the years to make Linux more compatible with Windows. Linux developers rightly say they're happy with their ecosystem and that any further moves in that direction would not only complicate matters but also require much additional work not to mention they'd likely make Linux less secure. That's also pretty much my position.
With these factors in mind it's clear Microsoft has no qualms about implementing changes to Windows that benefit itself even if they are to the considerable disadvantage of users (that's the inevitable outcome with monopolies). Thus, fallout from this latest change will be minimal, yes MS will lose a small percentage of users like those here on HN who are both outraged and technical enough to make the change, but as you say with no other practical option available the vast majority will simply fall into line with Microsoft's demands. In the wash-up, Microsoft will have done the sums and in the end it'll be further ahead.
Given the never-ending issues many users have with Microsoft's administration of Windows and the way it treats its users with abusive contempt, something has perplexed me for years which is why there has been so little support for the FOSS Windows lookalike, ReactOS, it's been in gestation for so long—over quarter-century—that I call it the "Going Nowhere Project". It's damned annoying ReactOS is still not available, if I could get a reasonably stable version I'd use it immediately for all that legacy Windows stuff that refuses to die.
It's not as if ReactOS doesn't have potential, it does and I've actually had various alpha versions running, although they weren't very stable. When I've queried the reasons for its snaillike development more often than not online commentators say it's because MS would sue it if it actually worked as intended. Possibly, but I reckon there's more to it than that which I'll not address here.
Nevertheless, with this latest edict from Microsoft it's clear to me that more than ever we urgently need an operating system that's capable of running the Win API without any Microsoft involvement. As I've shown, Linux can help many but not all Windows users escape Microsoft's clutches, that means we still need a more general/practical solution for ordinary users. Unfortunately, the only suitable project seemingly on the horizon is ReactOS, but it will never become a viable option unless it's put on a much more solid foundation and made into a well-supported mainstream FOSS project.