It sounds very out of line of what you'd expect.
Except if Sam and Greg have some anti-compete clauses. If they join MS, they have a nice 10 billion USD leverage against any lawsuites.
Your understanding is incorrect. There are some exceptions where noncompetes are allowed in California, but they mostly involve the sale or dissolution of business entities as such. There is no exception for executives, and none for people who happen to have equity stakes of any size.