Microsoft is pushing ARM heavily to make sure they don't pay full price for x86 hardware, that in my view is primary reason
Yep I don't know why people don't understand this. Microsoft has zero incentive to go to the expense of supporting a second platform unless it benefits them in some way. The only possible benefit is selling more Windows licenses, which means increasing the size of their potential market. There are three ways to do that. One, lower the cost of PCs - if Intel/AMD have more competition they have to charge PC OEMs less for CPUs. Two, increase Windows' share of the overall "PC" market - which isn't just Macs but also Chromebooks. Three, entice people to replace their PC before they otherwise would - that's what the "AI PC" push is all about.
We should all remember that when they decided to take another stab at Windows/ARM it was well before Qualcomm bought Nuvia. They were looking at this as a way to get some lower cost Windows PCs on the market to compete with those lower cost Chromebooks. They did not foresee that they might have some ARM PCs that competed with x86 PCs, that's a bonus as far as they're concerned but not the reason why they did it. Some people like to claim this was about the Mac but Microsoft doesn't care about Apple. The Mac has been around since before Windows, and has always had a small share of the market. It moves up and down a bit over time, but never has been and never will be a threat to Windows' dominance.
I suspect Microsoft is more worried about Chromebook than they let on. It is backed by a company with pockets almost as deep as theirs, and one that relies on post sale revenue (collecting personal information of and slinging ads at its customers) not on OS licensing which (along with the cheaper ARM SoCs) allows for lower pricing. Becuse of those low prices it is used a lot in schools, so kids are now growing up used to ChromeOS instead of Windows. It isn't clear how important that is, but it is a change from the status quo and change is always risky when you currently enjoy a near monopoly in a mature market.
That is also why AMD has no incentive to spend resources developing ARM chips to compete with Qualcomm. They want ARM PCs to fail, not to help them succeed! They won't get involved unless/until it becomes clear that ARM PCs are going to succeed. That's far from clear at this time.
They want to put their best tech forward with Zen 6, not split their focus trying to develop ARM chips as a "backup plan" like some seem to suggest they could/should.