Because they have a regulatory presence in the UK. (Which makes it easier to tax them for a start).
We need to be careful here - Microsoft are a behemoth - truly one of the worlds Big Beasts. And just because it can' get it's way, may not be a bad thing. However by allowing this narrative to explode onto the world stage, the UK government has lost this battle before it started. Because even if the UK is right here (and I have some sympathy with the decision) the pisspoor control of messaging in and of itself tells you how shit Unicorn Sunak is.
Meanwhile