No, it's not new or strange. It's a normal component of sanctions, and it's fundamentally how they're implemented. Otherwise you could circumvent them by setting up two companies.

It becomes impossible to predict which companies and services may be suddenly impacted.

It's pretty easy to predict. Do you do business with a sanctioned country? Then you'll be impacted. Easy enough.

I'm all for the EU sanctions against Russia, and consequences for those entities breaching them. But Microsoft didn't breach the sanctions, and should be used as a tool to punish those that do.

Are you under the impression that Microsoft is being punished in any way? They aren't, they're simply not allowed to do business with companies acting against sanctions if they want to keep doing business in the EU.