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Horse armor came out in 2006. Micro transactions started in 2002 with Maple Story. Plenty of other games had micro transactions by then. Horse armor was a peak when Microsoft drove too hard and consumers pushed back- it was far from the start.
wait, did microsoft own bethesda back then?
No, but they had a very close relationship. Morrowind was an Xbox exclusive. Oblivion was a timed Xbox exclusive that was supposed to be a 360 launch title that got delayed (the Horse Armor fiasco happened in 2006, while Oblivion didn’t release on PS3 until 2007).