If you distribute GPL code you then become subject to its restrictions and must provide the code.
If they were banned because of the GPL the company was doing its own stupid rules completely unrelated to the restrictions imposed by the GPL. If they weren't then it shows the difference between the GPL and the non-commercial use term of this particular MS license.
For MS and a surprisingly small (in terms of total global economy) number of other businesses selling closed source software (or software dependent on other non-Free software components) the GPL imposes very real restrictions.
I would argue that they are in no way arbitrary but have a clear purpose and objective to further increase the amount of Free software in the world. You may or may not support or want to assist this objective but it certainly doesn't feel arbitrary to me (I've taken the 'capricious; unreasonable; unsupported' definition of arbitrary from Dictionary.com as my interpretation of your meaning).
Can't reply to you for some reason. No citation but you have missed my point. I wasn't comparing Open Source Industry to closed source software industry but really the software industry to ALL Other industries (and individuals) in the world. Basically software consumers rather than producers (of which closed source companies like MS form a large part).
If RMS was true to his principles, he would make GPL more viral to cover every deployment and co-deployment. But they leave this huge server hole instead. That is what I mean by arbitrary. Why a hole there and not elsewhere?
Don't want to answer for RMS. I can't think of less arbitrary way of achieving their aims.