The crazy thing is that - I worked on VS 10 years before you did - and it was at a (near) billion $ ARR back then. So, it looks like it has been a flat business for a long time.
It's more that Microsoft lost the cross platform war. .NET lost and electron won. They even use it (or their own WebView knockoff) for their own products now. So there's no more need to give .NET away. They just milk the niche market that still depends on it.
It does yes but it's no longer a mainstream dev tool really. Which means there is no longer any point in giving it away for free to try and gain more mainstream application marketshare.