Can I replace the microphone

You can, but it's quite a tedious process, and more than likely if the microphone isn't working properly, it's a factor of debris clogging the holes sound is intended to travel through, or something being slightly misaligned.

There's a really detailed video below. I am not sure I would recommend this repair for a novice, due to the size of the components, and Apple watches in general can be very touchy due to their small size. But cleaning this up some from the inside can made a world of difference.