I can tell you that I find the frame rate and resolution of Zelda to be unacceptable, given that they don't allow any option for that game to run on other hardware, legally. I've heard enough complaints from my girlfriend to know how little they cared about Animal Crossing in the online experience (a minute and a half connection screen every time someone joins your island!) or the UX (manually hitting A over and over to craft something thirty times that you should be able to do in bulk). Smash's online could have been done right this time, but they took the cheap way out instead of properly developing it with rollback. Their voice chat solution is to hook up your phone with an app and use it separately rather than baking it into the device's OS. I would call all of these poor quality and unacceptable.
I agree with you as far as their attitude towards Mario 35, but what do you think is going to happen to Sea of Thieves once they decide to take the servers down? This is not something that Microsoft is going to fix, it's the pitfall of all live service games, and as time goes by gaming companies only seem to insist more on this direction.
So then why does Microsoft frighten you when Nintendo already does the shitty thing of their own accord? The stuff they do with their online catalogue of retro games is the shitty thing no one else is doing. Remember that Microsoft had a great remaster of Goldeneye ready to go for 360 that Nintendo denied in the 11th hour, and when that game finally came out again, it's only available in subscription services rather than for purchase, both the Switch and Xbox versions were worse than that remaster, and only the Switch version had online play.
The only reason I trust Microsoft and Sony to do better, even by a smidge, is because they actually respond to market forces, and Nintendo would rather go bankrupt than sell you a ROM of Super Mario Bros. for $8 on PC. But Microsoft isn't acquiring them anyway. Buying Activision closed that door, so all of this is moot.