Microsoft was failing long before they started porting games.
Not to this degree, but you raise an interesting point. Let's recount what happened.
But TLDR; Everything that has led Microsoft to this point has to do with being a console manufacturer that failed to uphold or purposefully
undermining their console as a gaming machine and product.
1. The first signs of Microsoft's trajectory came later in the second half of the 7th gen. After a disastrous launch a year after the 360 and at 200 more dollars, Sony gained ground by bolstering the exclusive game catalogue they had, mostly but not entirely by first parties. It is worth mentioning that the PS3 gen was when the PS 1st party infrastructure now known as PS Studios was created. Xbox had benefited from a few third party exclusives due to being early to the party and having a much easier machine to optimize for, but began to slow down on those fronts and did nothing to retain their lead. They seemed more interested in Kinect, to a degree not even Sony was despite the PS Move being a thing. They were not proactive in the progression and upkeep of their own internal studios. They lost Bungie 2 years in the 360, and closed a handful of others. It is also worth mentioning that Phil Spencer became the head of Xbox Game Studios worldwide in 2008.
2. At the cusp of the internet establishing itself as the ever-present utility/entertainment hub it is now, they reveal the Xbox One in 2013: Its primary function, as far as Mattrick and co. were concerned, was an ever-present general entertainment box meant to permanently connect you to online and allow you to watch TV, Netflix and YouTube. DRM and lol, no used games for you! They don't announce many games of consequence either. The console came out to a somewhat lesser launch to the PS4's, which Sony marketed primarily as a gaming machine, and showcased many titles that appealed to core gamers between their February reveal and E3 2013. Within months, the Xbone starts to lag behind the PlayStation as a direct result of its focus and mandatory/pricey inclusion with Kinect, it's mandatory always online policy (that was dropped before launch just to rear its ugly head at the very end of 8th gen) and its lack of focus on games. Don Mattrick is fired and replaced with Phil Spencer as Satya Nadella succeeds Steve Balmer in 2014.
3. After letting the first party infrastructure rot for more than 5 years, Phil Spencer and Xbox leadership find themselves in a predicament. Forza is mostly okay, but Halo isn't as good under 343i, Gears of War is overplayed and has to slow down dev time with everything else, and literally all of their other studios have declined to the point of embarrassment ie Rare, or have shut down ie Lionhead. They eventually get down to a measly
5 first party studios. Critical acclaim is not achieved. Fans don't like that games as much, because they're worse, and don't have much to be excited about because there's not much announced.
The few new announcements like the Phantom Dust reboot are getting canceled, games like Crackdown 3 and Sea of Thieves are getting delayed into oblivion, third party exclusives are universally flopping (Sunset Overdrive, Quantum Break, Rise of the Tomb Raider) or having embarassing development meltdowns (Scalebound) while multiplats are selling disproportionately worse on Xbox One regardless of genre. Sales have slowed to crawl. The embarrassment and lameness surrounding the Xbox brand increases.
4. Sales of hardware and software are so bad that Microsoft starts porting shit to PC. First, they try Windows Store exclusivity. It doesn't work. Then they give in and go to Steam. That doesn't work either, not in the sense of actually changing the picture for Xbox. They're scraping the bottom of the barrel at this point for a rounding error of the revenue they have and the revenue they want to achieve. You'll notice that of the ~24 billion in revenue PlayStation achieved last FY, their PC revenue topped out at 250 million or so. Barely more than 1%. And just like it was with Xbox, that 1% comes with a cost. Whoever doesn't have the given console at the time the 1st parties start coming to PC will have less incentive to get it later. The people who do have the console may have more incentive to leave. This worsens over time, and that's exactly the effect had on Xbox. It doesn't help that Xbox games decline in polish almost as soon as they start the PC release strategy. Sound like something that's been happening recently?
5. Up until he bought entire publishers to remedy a problem he created and maintained was actually the way the industry was going, Phil Spencer undermined and disregarded the importance of premium AAA single player games. Of course, with multiplayer games that aren't even exclusive to the platform, quality of game doesn't (appear to) matter as much as the appeal to the lowest common denominator does. This mentality informs the greenlighting behavior, development pipeline, and ultimately the quality of Xbox games even to this day.
6. By 2017, Satya Nadella successfully shifted Microsoft into a services company. Azure and Office 365 and the service to maintain them bolstered revenue and profits to a legendary degree. He noticed that Xbox still had not managed to be the extension of the Windows ecosystem he, and ostensibly Don Mattrick and Steve Balmer thought it should be. He brought in Spencer to convince him that gaming is a worthwhile avenue that can be rolled into this now provably successful
service model of the company. Enter Xbox Gamepass, the Netflix of games. An attempt to completely restructure the games market. Open platformism, cross gen ports, Cloud compatibility/mobile device functionality, all to uphold the games as the ecosystems instead of hardware itself, and to make that ecosystem a service instead of a product. Only the service isn't growing as fast as it should despite the 1 dollar deals and "best deal in gaming" propaganda and buying sprees of 2nd rate studios with the promise of games that launch 4-5 years after announcement. They buy and buy and buy until they can buy and spend no more, their new gen console is selling at an even slower rate than the Xbox One, their games are shit. Microsoft proper has now stepped in calling the shots, and now they're releasing games not just for PC, but for competing consoles. And you know what? That will just make things worse. Just as releasing games on PC did.
As for least amount of polish you don’t suppose the impact of covid and the massive data breach Insomniac suffered contributed to that?
Coof lockdowns has something to do with it, yes. Data breach, no. Because SM2 released before that, and all of the issues detailed in the leak predate the leak itself. Wolverine taking longer because of parallel PC development was going to happen with or without the leak.
Or the fact that the studios with games that had the least amount of polish (Insomniac and Guerilla games) were/are wasting time on GaaS projects? As for Wolverine and other games taking long, once again Covid, data breach, and teams wasting years on GaaS (why do you think Naughty Dog has basically nothing this gen, oh right, all the time wasted on TLoU multiplayer) probably contributed far more.
I see the GaaS chase as a result of the new mentality at Sony that necessarily includes porting games to non PS platforms. You'll notice that 3rd parties with no incentive to uphold their own hardware started that chase years before Sony with even fewer and smaller examples of meteoric success. It's no surprise that Sony starts to chase the same things as multiplatform publishers when they start porting their IP to multiple platforms.