The more I think about it the more I think Tango was just the victim of a situation were there were no right or good choice.
I think Bethesda was specifically targeted by MS with costing cost & increase revenue, Arkane Austin, Roundhouse, Alpha dog were all target I can understand for one reason or another, but they just did not satisfy the new mandate and considering all of Bethesda remaining studios there were simply no good option to be taken and Tango fell victim.
IMO this is all due to MS identifying opportunity with better ROI than video game, just like the rest of the industry also realised early 2023 and after MS purchase both Bethesda and ABK. So Xbox went from what MS identified as a great investment opportunity to again being one division that need to prove itself worthwhile of it.