How are these vendors getting away with this? Is their product/support so much better than open source + third party support, or are they entrenched?

Inertia and vendor lock-in are really powerful forces. Previous decision makers chose a Microsoft stack, and those who came before them did the same. Our third party services provider was a staunch Microsoft supporter. Before anyone knew it, we were completely locked in to a Microsoft ecosystem, paying tens of thousands per core for new SQL Server licenses.