M$ is _not so_ afraid of Linux, which is a grown up child. Why should they fear a baby? :)
Could it be that Google has enough resources to push for the adoption of their Crome OS?
Call me a pessimist, but I still think Chome OS will go the same way as other Open Source OS - mostly used by the tech savvy type.
An ordinary user will still ask if they can install M$ Office in it, besides all the other apps that are written for M$ Windows.