They have explicitly told us that libraries are not a big enough market share to warrant a custom solution. However, once I told them that this was pretty insulting they flipped their stance, telling me that libraries a social good project for them.
I agree with you that they may just not be a viable library solution anymore. We of course would hope that they could find a way to work with us. Microsoft is not a small company and if we really are a social good project then this would be the time to stand up and show their commitment to our values.