So is Microsoft going to block all Java? It would be very stupid I believe.
No. Java is made by another company (Oracle), and if Microsoft started playing Shenanigans to disable Oracles' software for clients that depend on it, they might get sued for unfair business practices by both Oracle (because Microsoft is unfairly depriving them of customers) and by the customers (because Microsoft is unfairly disabling their business critical apps).
That said, I'm pretty sure everyone at Microsoft would strongly advise companies to consider alternatives, but that's an entirely different ball game.