If Microsoft, Apple, and Google all disagree with WHATWG or W3C, they're winning regardless of whether or not Firefox exists.
The second scenario is just repeating the problems with Chromium.
In theory, if one engine was agreed upon as ideal and collaborated on fairly, the other parties could just fork it and maintain that branch separately from the usurper and make that the standard.
If everything were based on Chromium, and Google really wanted FLoC, how would that play out?
They'd add support to the codebase and... what? Everyone else would fork? Or how about for DRM support?
It's the "collaborated on fairly" that's the difficult and unsustainable piece. Especially when we're talking last mile things (i.e. that interact with the user) and the additional rewards those entice less altruistic parties with.
Java/Oracle/IBM is what you realistically get when there's serious $$$s on the table and multiple parties. And that's probably about the best possible outcome.
The second scenario is just repeating the problems with Chromium.
In theory, if one engine was agreed upon as ideal and collaborated on fairly, the other parties could just fork it and maintain that branch separately from the usurper and make that the standard.