Interesting enough, back in the ps3/ps4 days everyone in my corner of Eastern Europe seemed to have gone for an xbox (and maybe even an xbox 360).

In the past few years, the xboxes were always in stock while people were joining waiting lists and lotteries * for the PS5.

* One large electronics chain actually had a lottery for the PS5 preorders at launch, because they weren't getting enough to cover what was already paid for! Some lucky people got a PS5 the rest got their money back :)

Why can’t an Xbox run general purpose applications? Windows 11 can run both video games and general purpose applications on Xen 2 CPUs and RDNA2 GPUs. The current Xbox OS is a Windows NT kernel running under Hyper-V, same as desktop Windows 11. Microsoft even claims the Xbox OS is based on Windows (because why wouldn’t it be). It can even run Universal Windows apps installed from the Microsoft store.

So, what makes it not a general purpose computing platform? Unless you mean to argue that a computer with a Xen 2 CPU, RDNA 2 GPU, running an OS based off of Windows 11 that can run Universal Windows applications is not general-purpose.

Mandating consoles be opened up would destroy the console industry as we know it, but that would be a good thing - the only reason consoles were a good thing in the first place was because they were specialist devices that drove hardware innovation that simply wasn't feasible otherwise. Nowadays consoles aren't specialist hardware; they're PCs that have been slightly modified. The value proposition for consoles have almost nothing to do with new hardware capabilities like the N64 or PS3 promised (PS3 promised; the PS3's launch flopped due to Sony's arrogance and failure to cater to devs, not due to lack of power in the hardware itself - as later PS3 games demonstrate).

So suppose consoles were forced to open up - if Sony and Nintendo bought devs en masse, then 1) that sounds like an end-run and could easily open them up to a product-tying suit, 2) that would lose them tons of money, because now they're losing money on their hardware and their devs (because forcing exclusives loses more than half of your potential sales base), and 3) indies wouldn't give a shit, because Steam already exists and in fact could be one of those third-party stores that the EU specifically forced consoles to allow, in this hypothetical.

This wouldn't catch the industry completely flatfooted either, because back in the Windows 8 era Microsoft managed to scare Valve enough that they started investing in Linux as a backstop. The Steam Machines were a flop, but they've since released the Steam Deck to fill the portable console niche, and they've kept working on SteamOS and Big Picture mode to fill the gaming HTPC niche.

Also, you're claiming that Microsoft might buy Unreal Engine or Unity in order to force it to be Xbox-exclusive; that would bring the antitrust hammer down like nothing else. The only result of consequence in the 0.0002ns before the EU carpetbombs Redmond, would be a huge upsurge in suppport for Godot. Godot isn't ready for primetime just yet (especially in 3D) and games can't practically switch engine mid-development, but people are already on edge from Unity's recent "charge per download" (scandal? controversy? worrying incident? whatever you call it.)

Also, there are entire markets where game consoles don't have all that much penetration. China, in particular, who had banned consoles entirely until 2015, and restricted them until at least 2018. Convincing the Chinese market to buy even one console, let alone multiple, is unrealistic and platform holders know it.

I don't know how you arrive at those conclusions. None of this make sense to me. The thing you fear is already reality. Console manufacturers have always been trying to force exclusivity. Which they can because they own the store. For a long time exclusives were the only thing carrying console sales, and forcing customers to buy multiple consoles.

Why would anyone want to be bought? There would be nothing to gain for devs. No one would need to accept any deals to get on a platform since they wouldn't need to use the manufacturer's store. Currently the deal is "Money + Access to the platform". Third party stores would cut this deal down to just "Money". Thus exclusivity deals would get a lot more expensive for Sony, Nintendo etc. Thus they would be able to buy less "developers, game engine vendors etc en masse".

Indie devs would have a much easier time competing without having to bow to the gatekeepers demands. I really don't get your reasoning.

Instead of just raising the price of the console so it makes a profit?