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The Microsoft phone failed even though it was technically excellent. A shortage of good apps did it in.

I highly doubt the Microsoft phone was technically excellent. I say this as a Certified Microsoft developer who worked with Microsoft technology for 20 years. I suspect they tried to tie it to some sort of weird dot net developer community but I never had any direct contact with their phone stuff

I have left the Microsoft development sphere but your point about lack of apps is spot on. The only way I think they could make it work is if it is an Android fork so that at least the Android apps would work (possibly require a recompile)

Android is a mobile operating system based on a modified version of the Linux kernel and other open-source software, designed primarily for touchscreen mobile devices such as smartphones and tablets. Android is developed by a consortium of developers known as the Open Handset Alliance and commercially sponsored by Google. It was unveiled in November 2007, with the first commercial Android device, the HTC Dream, being launched in September 2008. Most versions of Android are proprietary. The core components are taken from the Android Open Source Project, which is free and open-source software primarily licensed under the Apache License. When Android is installed on devices, ability to modify the otherwise FOSS software is usually restricted, either by not providing the corresponding source code or preventing reinstallation through technical measures, rendering the installed version proprietary

Like Chrome being based on the open sourced Chromium browser, most of Android is based on open source software. Google throws money at both and turns them into their own proprietary software for profit and personal data collection.

A Chromebook is a laptop or tablet running the Linux-based ChromeOS as its operating system. Initially designed to heavily rely on web applications for tasks using the Google Chrome browser, Chromebooks have since expanded to be able to run Android and full-fledged Linux apps since 2017 and 2018,

https://source.android.com/

There are de-googled versions of Android.

GrapheneOS is the best alternative and is Android app compatible.

GrapheneOS has official production support for the following devices:

Pixel 7 Pro (cheetah)
Pixel 7 (panther)
Pixel 6a (bluejay)
Pixel 6 Pro (raven)
Pixel 6 (oriole)
Pixel 5a (barbet)
Pixel 5 (redfin)
Pixel 4a (5G) (bramble)
Pixel 4a (sunfish)
The biggest battle would be the apps. They would likely need to be modified and IF Musk wanted the phone to be less data intrusive, a lot of app developers wouldn't bother because they're used to selling your data. In app ads are another way they can make money. They can also charge a few bucks for the app but that's fallen out of favor because dumb, cheap people will find a free versions and either deal with the in app ads or their data being vacuumed up and sold.
GrapheneOS used to only work on Pixel 3/4 which are older models but not works on Pixel 7 Pro which just came out this past May. The down side is that starting with the Pixel 6, they use chips made by google. Prior to that, they used the Qualcomm snapdragon processors.