It's no secret that Tim Sweeney doesn't like Microsoft and what they are doing with UWP. He's been at the forefront of criticizing them every chance he's had. It also sounds like he is motivated by a more emotional agenda than a logical, objective one. Thus, I think he is over exaggerating the intentions of Microsoft.
UWP is not the enemy in my opinion. For years Steam has enjoyed a pretty much uncontested monopoly of the PC gaming market, and for good reason. The Steam platform pretty much saved PC gaming from itself in 2004, and they've continued to make PC gaming issues irrelevant with every iteration. But we all will agree that Steam is far from perfect. In fact, there are more controversies creeping out almost every day, probably not all Valve's fault, but definitely part of the environment Steam has created.
UWP will be positioned as a competitor to Steam, not a replacement. Microsoft has at least one person smart enough to know that they will alienate their entire target market if they so much as hurt their precious Steam platform. Microsoft will have more than 22 million angry users actively avoiding their products should they go after Steam in such a cynical way. It would be the worst business strategic decision of all time if Microsoft did that. No, UWP will emerge as a competitor, and Microsoft will leverage their Xbox Live user base and their Xbox integration as the initial pull onto their platform. gradually they will add more and more titles outside of Xbox and Microsoft Studio titles, probably start a price war with Steam, and take on the platform in that way.
And this is not a bad thing. With genuine competition from Microsoft, Steam will be forced to use their unending pile of money to innovate even more, and in retaliation Microsoft will try and will our hearts with even more functionality. In both scenarios we as gamers win, as we get better platforms and better features.
Tim Sweeney is cynical and emotional in his thinking.