Of all the firing decisions at Xbox this is the most shortsighted. Do you think or how has competing with the world on another UE work for you? games would run worse , feel worse.
You should be encouraging more people to use Idtech.
Also Unreal Engine is not free, it cost 5% of revenue, or $3 per game sold (assume $59.99 msrp). for small studio, ok, but for Microsoft's Scale? i don't know.
IIRC Doom Dark Age sold 3m? copies, so it would cost $10m in Unreal Engine fees. Doom Engine team likely cost more.
Microsoft problem is it is giving away games for free on gamepass, so it sees its engineers as cost center.
The likelihood that MSFT wouldn't have a specific deal for UE is super low. But even in that case, I would imagine that costs for hiring a team to maintain an engine for the minimal games using IDTech's engine (Wolfenstein & Doom), in which they probably plan to reduce development of those games with recent news, makes this a 'not unreasonable' decision.
