Will Microsoft Edge browser affect Google AdSense and other web ads services?

I don't think so because Bing Ads are run by the Microsoft. And if they only ban the Google adsense ads then that would be called monopoly by MS. So they don't want to do that if they don't want lawsuit from other ad agencies. As for distraction free display, they are making it free from pop-ups and all the menus and desktop taskbar. There are plenty of things going on with this browser. It is however a bit similar to Vivaldi browser.

Microsoft Edge Browser has a features namely Reading Mode. When a user enables this feature, Edge automatically blocks all the adverts from the page. This also includes Adsense ads. So yes, Edge Browser will affect the performance of Google Adsense and other Ad networks.

I think yes. As Edge disables the unwanted stuff from a website. Unwanted stuff includes ads. They have an ad blocker which enable user to read only content.