Steam version, 100%.
Not only does it have less intrusive DRM but it does not rely on the Microsoft/Xbox store. Now, when the Microsoft Store and Xbox apps are working as intended, they are perfectly fine. Not great or even good, but fine.
The trouble comes when something goes wrong and you try to troubleshoot it. Better hope you never get the cursed “gamingservices” won’t install/update bug, because if the dozens of suggested solutions to it don’t work (they wont), you’ll be reinstalling Windows in it’s entirety or not playing your games.
I went through it with Forza Horizon 3, had similar problems with Forza Horizon 4 that prevented me from playing the game that I purchased for MONTHS. I will never make another purchase on the Microsoft Store or Xbox App, when things go wrong they go way wrong, and most of the information you’ll find while trying to Google a fix for it is going to be out of date or otherwise completely useless. What works as a fix for one person might not work as a fix for you. It is infuriating.
Just do a search here on the forums for “gamingservices” and see how much fun it looks troubleshoot.
CasualClick mentions that the Steam version still relies on a functioning gamingservices installation to work. I don’t doubt that, but I’m having a hard time finding any posts related to the Steam version of Microsoft games like Flight Simulator, Forza, Halo etc and the inability to update gamingservices. In fact its the exact opposite, literally every post I can find on these forums, the Steam forums for said games and on Reddit that are trying to diagnose a bad gamingservices install is using the Microsoft Store. So, while the Steam version may still require it to function, whatever process that causes it to break when playing games via the Microsoft Store/Xbox app doesn’t seem to be present in the Steam versions. If someone can point me to a case of this happening on the Steam version of these games, I will happily admit to being wrong.