I think MS should just recognize defeat and focus on being a publisher and a cloud solution provider. They'll just be outclassed by Valve once again. No PC gamer wants to use their shitty store and the first thing anyone would do would be to install Steam.Actually, the reason I feel it works for Microsoft even in that context is because at the end of the day, it still locks PC gamers into the Windows ecosystem, and Microsoft gaming hardware devices.
Both of which are things Valve want to shift gamers away from (Steam OS/Linux, and devices like Steam Deck and whatever other PC gaming hardware they do going forward). And doing that also gives Microsoft some real value proposition in gaming for a change...although it'd mean abandoning the traditional console business model to do so.
In the advent Microsoft don't actually stop making gaming hardware altogether, this would probably be the alternative they take.
If you can't install Steam on it then it's just Xbox again and nobody will want to buy it.