How can Microsoft let this happen?

I was on my Xbox one the other day and noticed some app in the store called Free online movies HD and I thought to my self how is this possible so I downloaded it and it worked. It streamed tv shows, movies and cartoons even shows that are only available on paid subscriptions like Amazon prime at first I was a bit surprised, as Microsoft would release an app the would decrease their sales. I remembered that a xmbc was coming called Kodi and that would be better as you can download multiple plugins and get different services but what's cool about it is it's all free. I just can't think why Microsoft would allow an app on Xbox one that decreases sales unless they are not monitoring what's going on the store?
Tell me what you think about this!