Canonical don't have the heft to compete against Red Hat, and especially not IBM + Red Hat. If Wikipedia's figures are right, Red Hat employs more people maintaining the kernel and RHEL packages than Canonical employs in total. This matters a lot for government and other large customers.
The companies that do have the scale needed to compete are the cloud vendors who are rolling out various certified cloud instances, and in the case of Microsoft/Azure, AMD-based confidential computing.
Probably oversimplifying, but I get the feeling that Red Hat's compliance-enabled versions are for enterprise companies who need Linux, and Canonical's compliance-enabled versions are for smaller tech companies (or once-smaller ones) who need compliance.
It’s not about Canonical’s employee count, and frankly it’s not about Linux - that’s a shrinking revenue base. You’re also ignoring that Ubuntu was the leader in cloud for Linux for many years, mostly due to the lagging kernel releases when things like Docker arose, but also smart marketing moves on their part.
It’s about the apps and the datacenters. The hyperscalers are formidable competitors, so it’s all about OpenShift becoming the new multi-cloud operating system across them.
The companies that do have the scale needed to compete are the cloud vendors who are rolling out various certified cloud instances, and in the case of Microsoft/Azure, AMD-based confidential computing.