It's likely that it was a non-starter for Microsoft as part of the requirement (from Bungie's perspective) for any acquisition deal was Bungie remaining an independent studio. While MS under Phil Spencer is allowing Microsoft Studios greater flexibility with what games they want to develop and how they want to develop their games, they are still under the control of Microsoft.
MS currently has no lack of studio experience with GAAS after their acquisitions. They even have an MMO (Elder Scrolls Online) as part of their games portfolio now.
So, Daybreak Studios don't currently really have anything to offer them. And while development continues on EQ, it's very much a small niche of gamers that they are catering to.
MS's acquisitions are focused on either [1] broad gamer appeal or [2] targetted niche genres that fill a gap in MS's game portfolio.
Personally, I'd love if EQ had greater funding. Well maybe not. I've currently stopped playing MMOs because they are the only gaming genre that I find irresistibly addictive. And I don't currently need or desire anything in my life that triggers any sort of addictive behavior that might cause me to neglect more important aspects of my life.
Regards,
SB