Sure, he could do that if he had any kind of legal right to do so, which he does not. If all of Paul Allen's net worth were in Microsoft stock (and it certainly is not), he'd own less than 5% of the company at this point. Paul Allen couldn't release all of Microsoft's code any more than I could.

And of course, even if it were possible, Microsoft would need to come up with a new way to generate the 87 billion dollars in revenue it just lost, or else lay off 200 thousand people.