Hardware support aside (and that part is much better now than 15 years ago), all Microsoft has to do is add native support for Windows libraries/executables to Linux. They can obviously do a better job than Wine developers.
For example, ld-linux-x86-64.so.2 is internally used to interpret native Linux elf binaries and an additional library can be implemented to interpret native Windows binaries.
I presume since all started as a result of a Microsoft developer now being the co-maintainer of the Linux kernel stable trees.
I don't see Microsoft rebasing Windows on top of the Linux kernel for two related reasons.
1) The registry which a lot of commercial software utilizes for fine grained permissions over running the software (trial software, etc...). I understand that part can be emulated but look at the licensing issues there too.
2) The Windows kernel allows the NTFS file system to have a much more complex permissions mechanism (such as inheritance) over what the Linux kernel allows Ext4, etc...

While this makes Linux much easier to operate, administer, maintain, and use than Windows, the complexity of Windows internals is what attracts commercial software.

While none of this is absolutely necessary and we do have commercial operating systems successfully utilizing UNIX ecosystems (macOS), it is at least for now the way people who develop software for windows would like it to be.