dang i had not heard about this unlicensed controllers thing. I find this move very baffling, given Microsoft's current position in the gaming market. This is the kind of move you make when you are in first place, because you have market dominance to shield your company from the effects of bad publicity. Yet in spite of two massive acquisitions, Xbox is still the third-place console. And after 3 years of the Xbox SeX and PS5, it's kind of looking like they're going to stay in last place unless they start packing their release calendar with A-tier exclusives.
So if Xbox is still in last place, why are they going out of their way to burn the goodwill they've been building up over the last 6 years?
Those were the days when paid Xbox Live service was way better than the free PS network. If you wanted to play online, the experience was much better on Xbox. Sony's online experience has vastly improved since then, and their first-party games are generally considered much higher quality than Microsoft's alternatives.
This explains how Sony clawed back market share in the second half of the PS3 gen, but you're missing one crucial detail: the Xbox One. One cannot overstate how badly Microsoft misread the room and flubbed the reveal of the XbOne. The all-digital announcement in a time when physical games were still king, the required Kinect, the always-online requirement...they basically wrote the playbook on how to piss off reddit gamers. Sony had built up good will by becoming more pro-consumer over the PS3 gen, so then all they had to do in 2013 was say "the PS4 is just like the PS3 but better" and they were heralded as the saviors of gaming.