Is there "no reason"?
I want to steelman microsoft's position here, and I can find many reasons:
1. The financial loss of the product (Redfall) was large enough that keeping that business unit itself was a risk. They need to show wallstreet that something is being done.
2. While there are talented people at the studio, they are unable as a corporation to be able to figure out what went wrong, ie who do they need to fire and who can they keep.
3. Their current business model precludes just moving people to other products for some reason, they don't want to disrupt those other products with a reorganization, this just isn't how they run studios, they want the teams to be colocated, etc.
While sure its bad that the studio lost its job I really don't think it's no reason.