"Companies like Microsoft would vanish"
Heaven forbid! :-D
I go around telling people what I think of copyright all the time, and this argument is one that I hear a lot.
But I don't buy it. The body of open source content available today is proof that your argument is at the very least incomplete. Plenty of people do give their time away for free to make better things available to people without monetary benefit.
A key to my argument is as follows: people who give away their work tend to be on the wealthier end of the spectrum with some ability to give their time away - a single mother of four who works 60 hours a week probably isn't submitting pull requests in her spare time.
So then you say I have a flaw - only wealthy people can contribute to a world without IP laws. But again I disagree. In the world without IP laws, I believe deeply that the wealth we already have would be more evenly distributed, and the floor of minimum wealth would be much higher. I think in a world without IP laws, so many people would be so much wealthier that they could afford to voluntarily support those who still cannot support themselves.
I should also point out that there's absolutely still an incentive to create things even without IP protection, so I disagree with your argument on its face. Certainly there is a greater incentive to create when creators can legally bar others from selling their works, but that does not mean the incentive without IP laws is zero. To the contrary, innovators maintain first mover advantage and are free to build brand awareness. I'd rather buy something from a creator than a copycat, since the copycat is more likely to cut corners that materially impact the quality of the offering.
On balance I believe we would see MORE wealth and more innovation without IP laws, and while I may be wrong I think it's important to question the conventional wisdom that IP laws help innovation. I think in many ways they harm it.