Initially, Microsoft did very well with the strategy. Developers flocked to the platform in the late '80s and early '90s. While people like to make fun of Ballmer jumping around yelling "developers! developers! developers!" he did have a fundamental understanding that a platform is only as good as its ecosystem. Crushing ISVs eventually has a chilling effect, as they don't believe they can compete with the OS vendor, even with a better, cheaper, faster product. This did happen with pre-Jobs Apple.
Apple was in serious decline in the '90s and I recall a common meme at the time was that if you did manage to create successful Mac software, Apple just copied it and killed your company. (Steve Jobs turns that into a lottery where the successful apps were purchased such that ISVs dreamed of an Apple acquisition).
The driver behind Microsoft's lighter touch treatment of ISVs changed in 2001. US DoJ employees were in every major executive meeting from 2001 all the way until 2011. It created a new culture that put the chill in Microsoft. Microsoft would disband the IE team (only to regroup in 2004 when Mozilla presented viable competition), stop working on mail and messenger, and overall simply allowed the platform to linger.
During that decade of 2001 to 2011, a three person technical committee of the US DoJ had full and unfettered access to all of Microsoft's source code, staff, and IT systems. They monitored all actions to ensure it not engage in "predatory" behavior. I think that resulted in a lack of even competitive behavior.
From my perspective, the pre-2001 behavior worked pretty well, and the post-2001 treatment is the reason they are struggling to remain relevant.