No idea. I'm not sure why it would be a either/or thing. My best guess is that they felt it wasn't being used, so it was dropped when some update broke it. I didn't see anything on the MS side to sync, so it must have been from the Withings side - which means they knew exactly how much it was (or wasn't) being used.
I donno about that. They seem to have a complete line of stuff, including activity trackers. They appear to have the most complete ecosystem around. Even more than FitBit. They've got what I'd hoped that MS was building (although in an inclusive way, not walled-garden style.)