I don't really know what they're doing.
My view is that it all started when they decided to jump on the "mobile" bandwagon, some time around when Apple's iPhone began to take off. My understanding is that they suddenly began to be afraid of Apple's competition, something they had managed to keep under "control", or even ignore, for several decades. Incidentally, that's also when Bill Gates decided to stop all operational work at MS. You may conclude what you wish.
Apple pretty much introduced some key ideas at the time: that mobile platforms were going to be something big in terms of market, that the line between mobile and desktop computers was going to get fuzzy, and that a common OS architecture and associated online services was an interesting idea to go down this road. Microsoft basically took all those ideas and went on with the development of Windows 8, Windows Phone (a major flop), their cloud services, etc.
Beyond the Windows Phone disaster, they saw that "software as a service" was the new graal, promising a regular revenue stream. No more uncertainties, no more "every other OS version is a failure". Windows 10, Office 365 are epitomes of this new strategy. Do not let users have a choice. Choice is bad!
Sadly, what really started it all was this "one OS for all platforms" idea, which IMO utterly failed: Windows Phone was a commercial flop, I consider Microsoft tablets a semi-flop as well, but MS still insisted on shoving all those "mobile" paradigms and UI quirks down the throat of desktop users, leaving a very inconsistent UI, whereas Windows until then had maybe not the prettiest UI, but a very consistent one.
Beyond Windows' case, software as a service is just an example of the trend to switch from a traditional sales model (companies sell products to people that become owners) to a rent model, in which consumers do not really own their goods anymore, they just rent them. This raises a ton of questions, including the position of private property in this "new" world.