What if you have appliances such as a scale, lights, watch or something? Pretty much guaranteed that those won’t work unless you use their app. If you want to go FOSS, you may need to sell all of your smart stuff and replace them with similar devices that work in a privacy respecting strictly FOSS environment.
What they really care about is investors, some of which happen to care about ESG. The E stands for environment, so this way Microsoft can write many pages of greenwashing nonsense on their ESG report in order to attract investors without actually hurting their bottom line that much. Microsoft looks green, investors are happy, it’s a win-win… Oh but the energy consumption is still through the roof, but we don’t talk about that.