The only serious company that I'm aware of which doesn't understand that is Microsoft, and the reason I know that is because they've been embarrassed again and again by vulnerabilities that only exist because they run multitenant systems with only containers for isolation
Its all turtles, all the way down.
But for a typical case, VM's are the bare minimum to say you have a _secure_ isolation boundary because the attack surface is way smaller.
https://support.broadcom.com/web/ecx/support-content-notific...
https://nvd.nist.gov/vuln/detail/CVE-2019-5183
https://nvd.nist.gov/vuln/detail/CVE-2018-12130
https://nvd.nist.gov/vuln/detail/CVE-2018-2698
https://nvd.nist.gov/vuln/detail/CVE-2017-4936
In the end you need to configure it properly and pray there's no escape vulnerabilities. The same standard you applied to containers to say they're definitely never a security boundary. Seems like you're drawing some pretty arbitrary lines here.