I was not even considering the Proton angle. That would be a devastating loss to Linux. Which would be hugely in Microsoft’s interest to shut that down immediately.
It would be absolutely devastating to me too. I only do my gaming on Linux, and my large game catalog is through Steam. Which means that even if they can't really shutdown Proton because it's open source, it still might amount to destroying my game library.
It's not your grandpa's Microsoft, EEE isn't a thing now and it's unlikely they'll be hostile towards it. But instead it's more probable that Proton would have been ignored and gone stagnant, ala Amazon type acquisitions.
I don't think Microsoft can shut down Proton, any more than they could by modifying the current DirectX API to lock them out. It's Open Source software based on DXVK and WINE, both of which are publicly maintained.
If they stop working on it, I think it will be dead for new games in 3-5 years.
Maybe, but like I said Microsoft arguably already held the ability to kill DXVK whenever they wanted by modifying the master spec. Buying Valve to force them to stop paying contributors to a public project would be the most roundabout way to stop DirectX from being reverse-engineered. And it wouldn't stop someone like CodeWeavers from maintaining it themselves.