Red Hat's silent Linux coup de tat
If this were to happen, the GNU Project (and most likely Linux as an operating system) would be finished. By supplying the degree of development hosting/facilities that they have, and investing their own staff in the development of the packages, Red Hat have in effect hijacked large portions of the GNU Project's software, including such critical packages (to a GNU/Linux system) as Glibc. In doing this they have also demonstrated understanding of one key fact which Microsoft have not grasped...Namely, that the Linux kernel itself is only a single piece of software, and that the lion's share of the userland is comprised of GNU Project software. Control the GNU Project (as Red Hat now effectively does, at least in very significant portions) and you control the operating system itself. The GNU Project in a very real sense ceased to be free software from the moment its development moved to sources.redhat.com.
But wait, I hear you say. All of the GNU Project's software is licensed under the GPL. Surely the GPL would protect the software even if Microsoft bought out a large number of its developers? If Microsoft were to stop with the acquisition of Red Hat itself, then yes, it would. However, considering that Microsoft's next step would almost certainly be to close the source of these packages, the GPL would very rapidly become a legal inconvenience. In that event, the only thing they would need to do would be to step on the FSF itself, which they could probably very easily do by financially seducing whichever members of its' development base they didn't get with the acquisition of Red Hat, and the foundation's legal team. Richard Stallman has in truth retained very little genuine relevance these days, and is for the most part now considered a fanatical crackpot. Microsoft would find isolating him from his organisation to be simplicity itself if they were to seriously attempt it.
Then again, the above would probably not be necessary. Red Hat have already demonstrated that the functional equivalent of removing access to source code is possible with Glibc. Glibc in particular was a highly complex package to begin with...but Red Hat have been progressively working to raise that level of complexity to such a degree that the package will eventually be unusable to anyone but the company itself. Given what a crucial component a C library is to an independent operating system, and how few viable alternatives exist because of the level of complexity inherent in the package, Red Hat's hijacking of this package will essentially mean that not only will the creation of truly new Linux distributions no longer be possible, but it will essentially end the possibility of creating new GNU compatible operating systems in general. Red Hat have in essence done exactly that which was advocated for Microsoft by VinodV in the first and second Halloween Documents:- Glibc's use as the lynchpin of new Linux distributions or GNU compatible operating systems has been rendered impossible by raising Glibc's level of complexity to undiscoverable and near proprietary levels.
Embrace and extend: Take a standard, add proprietary functionality, don't document it or provide specifications for it. If you ensure that the proprietary functionality you add is sufficiently crowd-pleasing in nature, it will become so popular that the open standard will grow to be considered irrelevant and obselete, and people will become dependent on your own closed, non-free product. End of story, as far as people genuinely doing their own thing with software is concerned.
Add to that the fact that high level members of Red Hat's staff have joined the Open Source Initiative, and the picture of Red Hat's subversion of Linux (and with OSI, potentially the legal arm of the entire FOSS movement) is complete. Linux is now being held in a stranglehold by the company, although it may not be readily visible as yet...All Microsoft's acquisition of Red Hat would essentially do is drive the final nail into the coffin.