By which time XP was already in the middle of releasing, so it was too late to get Windows on board.
It's too bad, with a bit more planning and an earlier realization that Unicode cannot in fact fit into 16 bits then Windows might have used UTF-8 internally.
Unless I’m mistaken, Rhapsody (released 1997) used LF, not CR. At that point it was pretty clear Mac was moving towards Unix through NeXTSTEP, meaning every OS except windows would be using LF. Microsoft would’ve had around 6 years before the release of XP, and probably would’ve had time to start the transition with Win2K at the end of 1999.
Linux was definitely not uniformly UTF-8 twenty years ago. It was one of the many available locales, but it was still common to use other encodings, and plenty of software didn't handle multibyte well in general.
It's 2024 and we still can't all agree on line endings. Mac vs Win vs Unix...