Though Epic being a very loud squeaky wheel right now (versus Apple) is exactly why Microsoft may show concerns of rocking the game engine boat right now. Xbox Game Studios is using the Unreal engine in a lot of projects (Rare's projects like Sea of Thieves; though divorced from Epic for several years now, The Coalition still sometimes seems to get "second party tech demo" support from Epic on Gears) and probably couldn't quickly switch everything to id Tech if Microsoft got into a showdown with Epic like Epic has been fighting Apple lately. Which partly means it is already too late for Epic getting "too much" power to strong arm in the engine space (and thanks to Fortnite increasingly having the confidence to use it).

I want to think that Microsoft can do it, regardless of Epic (and even Unity), but I still think it is a minefield.