Something that needs a bit of clarification, what do they mean by "offered to remove all subscription options", and "the offer was rebuffed"? Do they mean that they created a new build with the subscription options removed, resubmitted, and had that build rejected? Or do they mean they sent an email to someone at apple and didn't get a response in a timely fashion?
I'm pretty sure that if you have an iOS application with signups and you have a subscription on your website, you have to have subscriptions available in the iOS app. Microsoft could just do what Dropbox did and allow subscriptions from their app and also allow the same from their website. Dropbox has more flexible options on their website than on their iOS app.