Responding to bug bounty reports is a thankless job. Especially these days it's a flood of AI spam, language barriers, "pay me first", incomplete reports, huge egos, and people who think every find should be treated as a critical vulnerability. The people who handle these reports often do so after-hours or on holidays. In smaller companies they're also often the ones who manage the triage, patching, testing, and security release process. In larger companies they have to find owners for every line of code and convince those code owners of the severity (often knowing that neither or them will be rewarded for doing the work).

All it takes is one wrong person to be assigned as a report comes in, a person who doesn't understand the real value of a bounty program, or one person having a bad day to completely ruin a company's reputation. It seems like that might have happened here (of course MS has done this before so who knows if it'll matter in the end).

Microsoft needs to be completely transparent and to do so immediately. They should, with the reporters permission, release all communications. They can exclude technical details if patches aren't available yet. Doing anything less is going to prevent a lot of people from using their bounty program in the future and we'll all be worse off for it. They almost certainly made a mistake and they need to own up to it.