I’m not sure that Microsoft ever did halt going down that path. My wife recently bought a PC that came locked down by default and required some fiddling to allow running unsigned apps. This was Windows 10, not sure about 11.
I think it could be more that broad compatibility with everything is their main selling point, and by doing so they were undermining their own ecosystem.
However, this is mere speculation on my part.
That’s a tough nut to crack. Even as a video game platform, they don’t write most of the software that they sell today. They would need to find some way to convince developers to write software for something that’s not the platform nearly all users are running.