We will continue to invest in and update the Groove Music app on all Windows devices to support playback and management of owned music, but after December 31, 2017, the Groove Music app will no longer offer the option to stream, purchase, and download music.
An update to the Groove Music app including the ability to move music to Spotify, will be available for Windows Insiders beginning this week. The Groove Music app update for Windows 10 and Xbox One devices will roll out broadly the week of October 9, 2017 and will enable Groove Music Pass customers to move existing music collections and playlists to Spotify. Groove Music Pass content will be available to move to Spotify until at least January 31, 2018.
Makes sense for Microsoft, since developing its own streaming service is much harder and complicated than a music store. There are lots of things that they need to consider, plus the fact that Spotify and other music streaming service already have their own userbase and considerable marketshare.
If ever Microsoft plans to dip its toes in the music streaming space again, an outright acquisition will be the best way for them to go but for now, partnership with the leading music streaming service is the next best thing.