The risk for Microsoft is that they lose control of the ecosystem, potentially jeopardising billions in future revenue. Piracy is relatively tolerable for Microsoft, because a pirate can still get locked into your platform; Eventually, you'll probably figure out some way to monetise that, probably by leveraging the size of the install base to secure very big contracts. If the Chinese aren't using Microsoft Windows™ but a specifically Chinese fork, Microsoft might lose the market forever, or be forced to target a platform that they don't control.