Wouldn't MS still benefit from all of the people who are buying windows handhelds if those handhelds run windows? Also wouldn't they benefit further if they run games like CoD on those handhelds?
In what way?
In an open system, you don't charge 30% rent when someone use something that didn't go through your store. The Windows would come with the handheld and thus sold at a loss. The CoD can be sold from Steam and thus MS doesn't see a cent.
Wait... You are serious? You actually believe the lie that Microsoft somehow magically gain money when someone play on Steam, just because it runs on Windows?
Edit:
I guess i should explain.
If the handheld is a closed garden, then it would be a strictly worse version of all the existing Windows handhelds that are out there already. And trying to run Series S games would kill the battery dead, assuming the thing doesn't overheat and explode first.
If the handheld is not closed, then it would have a market but not very profitable, because people would just install games they already paid for from Steam and be done with it. Steamdeck only makes sense because Gabe can reasonably expect most players would be Steam customers. Microsoft doesn't have enough pull on the MS store to feel the same.