I am pretty sure, they will refuse to repair it under the warranty. Wait a couple of days until you get back a message from their tech.
The most interesting thing will be, is that they will also not explain why 🙂
I have exactly the same problem with my wife's watch (aw3). 2 Months old. The screen broke around the edges. Very clean crack, no signs of impact. And... they refused. They even couldn't explain why. There is no tech report or something. It just says, that Apple tech thinks, that it was a damaged caused by the user. And that's it. Now I have a 400 Euro piece of garbage.
Apple Genius couldn't help me, because they don't do anything with Watches and can't even decide anything. All watches, they say, are to be send to Apple tech. I spent a lot of time on telephone support. They also couldn't help me. I was even trying to just find out, what exactly Apple tech has found. Because I don't see any damage caused by the user or any point of impact. The glass simply has a very clean crack on edges...
But the fun starts now. Yesterday I have notice a small crack on my watch (also aw3, early release). It's like glass starts to break from inside. No damage on the surface. But has exactly the same patter as on my wife's watch - started on the edge. It is probably because of a glass tension on the edges. I immediately took my watch to Apple to send it for repair/replacement under the warranty. But something tells me, they will again refuse. I can guess, that Apple tech will not be able to see any damage or will simply not explain their decision as in the case of my wife's watch.
I can't even describe how much I am disappointed with Apple's warranty service on Apple Watch. There are a lot of reports, even on this site about AW 3's screen cracking on edges (for example:Apple Watch series 3 screen crack , hairline crack on their new Apple Watch 3 (Aluminum Case)). But Apple doesn't take responsibility for it, they even refuse to repair/fix the issue. I am done with Apple's Watch. Obviously the tech process is not yet ready for their design decisions. And I have already payed more than 800 Euro (2 AW3) for their experiments.
Looking now to buy either Samsung Gear or Garmin. I need a sport watch for swimmers.