Why doesn't MS just close up shop?

Why don't they? One of Microsoft's biggest nightmares is backwards compatibility. Why? Because people are often slow to adopt the "latest and greatest" operating system. Consequently, Microsoft still has a huge installed base of Windows 3.1 users, and even more Windows 95 users. If Microsoft were to "close up shop" as some have suggested, the installed base of 3.1, 95, 98, and NT wouldn't simply cease to operate. Sure, it would take some time for a different OS to step into the place of Windows going forward, and it would be painful and quite expensive to make the switch, but the world would not stop turning. The fact that it would be painful, expensive, and lengthy to switch to another OS is simply further evidence of Microsoft's monopoly and market power and further justification to ensure they're operating within the law.

All of the above also assumes that the ability to "close up shop" is even an option. Microsoft is a publicly owned company, which means that while Bill Gates and Steve Ballmer may have a great deal to do with the operation of the business, a decision to shut the company down is beyond their abilities. Such a decision would be up to the stockholders, and there is no possibility that the stockholders would select this option for the company.