This is the future; partially fuelled by malware, partially fuelled by the desire for platform control, and partially fuelled by government regulation.
They tried to pull a similar move with WinRT/UWP, but nobody wanted it, so now you can continue with Win32.
They would love to do so, but legacy compatibility is a major business advantage.
They did a bunch of terrible inept rollouts with confusing technology for both users and developers and effectively shot themselves in the foot. But it did not have to go down that way.
Sounds like a nightmare universe.
I've got a hobby app in kotlin multiplatform with iOS/Android/Windows/WASM builds and while I have no issues with Apple's App Store or Google Play, I've had nothing but problems trying to support Windows Store.
The MSIX installer format is horrendous to deal with and the certification process for new releases on Windows Store is always far too long and in the cases they do find issues the reports of the issue that they log are entirely worthless.
I ended up just pulling the app off the Windows Store entirely and making it a downloadable *.msi installer. While the extra layer of presumed integrity of the app being on the Microsoft Store would be nice it wasn't remotely worth the effort for the tiny amount of people who were using the Windows version in the first place, especially given the app is free.