It would be highly uncharacteristic of Microsoft not to try competing with the Valve.
They had years of opportunity to provide better gaming hardware and software for their customers, but they didn’t. Now that the SteamDeck has gained popularity, they've realized the need refresh the lXbox”, likely with an emphasis on Gaming as a Service (Game Pass) and a strong push into streaming games. What they’ve been doing which is basically anything to get people to subscribe.
I wouldn’t be surprised if they released new features or hardware requirements that hinder the SteamDeck’s ability to play newer Microsoft game releases. It wouldn’t be too difficult for them, considering they’ve purchased a significant portion of the gaming market. One thing is certain—there will be zero innovation.