Tim Lee is concerned that the Novell-Microsoft partnership helps Novell's Linux look more attractive to corporate customers, because that could make non-Novell users feel like second-class citizens.
By that reasoning, Tim should also be worried about any innovations --technical or business model--that give one Linux distribution a competitive advantage over the others. If Red Hat improves the speed or security of its Linux distro, anyone not wearing a Red Hat might feel second class.
If the Free Software religion is so hostile to business innovation, don't expect customers to keep coming to church.