I guess Microsoft sees the Switch as a Handheld and not a home console than. To Microsoft, the Switch is not stealing any customers from them so they see this as easy money.
Microsoft is building up to a digital streaming service, kinda like google just announced. They are trying to grow their audience before they pull the plug on the hardware side of things. I’m sure they still view the switch as competition, but right now the two companies have two different visions for the future...