The Horse Armor is definitely an early form of microtransations, but it's not the first type. A lot of people think of it as the first "paid for dlc", but that's not quite right either. Because it didn't really add any new content, it just altered existing content. It was the first kind of paid "mod" of game. But even that's not quite accurate either. Because "Mods" include things that enhance gameplay, add/improve features, etc. What the horse armor really showed is that people would spend money for different "Skins". Horse armor was the first paid for "skin". Character skins, weapon skins, gun charms, etc etc.

But even given all that, the horse armor still isn't the start of microtransactions in games.

Crystals/EnergyShards/Feathers/etcetcetc. The price wall/gatekeep bullshit meant to restrict play unless you paid. Those are the first real "microtranscations". And for that you can thank casual games that predate the SmartPhone era. Like FarmVille.