next dev fails on module is not defined

[JacobLey]

What version of Next.js are you using?

10.0.10-canary.6

What version of Node.js are you using?

14.16.0

What browser are you using?

Chrome

What operating system are you using?

macOS

How are you deploying your application?

next start

Describe the Bug

If a file is written with ESM syntax (import/export) and is in a directory with "type":"module", NextJS fails to run in development mode.
It attempts to parse the file in the browser and hits a module is not defined error.

Expected Behavior

ESM syntax should be supported (transpiled into CommonJS) in development mode.

To Reproduce

Minimal reproduction: https://github.com/JacobLey/next-dev-module

Add a directory with two files:
package.json with content {"type":"module"}
and foo.js with content export default 'Hello World';

Try loading that foo.js file in any page, and next dev will fail

This behavior is not reproducible with webpack4.

[JacobLey]

Actually I believe this is a duplicate of #17806

Will add to conversation there

[balazsorban44]

This issue has been automatically locked due to no recent activity. If you are running into a similar issue, please create a new issue with the steps to reproduce. Thank you.