Windows became the dominant OS because of demand from computer users; the problem was that Microsoft used its dominance in the OS market as leverage to gain dominance in the browser market. It is not just that the OS came with a bundled browser -- Microsoft deliberately and for no technical reason made IE a dependency of several unrelated Windows features (e.g. the desktop, the file browser, etc.). Most people received Windows pre-installed on a computer they purchased; had Microsoft not made IE a dependency of Windows itself, OEMs would have bundled browsers according to customer demand.
So yes, in fact, having IE pre-installed was a problem and ultimately Microsoft was forced to create this:
Which was ridiculously as well, just like the cookie thing.
"- Microsoft deliberately and for no technical reason made IE a dependency of several unrelated Windows features"
So?
But they did not forbid other browsers to run. People who wanted, could choose all the time.
And even if they would have forbidden it, I still think regulation is stupid, because it still keeps the status quo of Microsoft OS Desktop dominance.
(Luckily it doesn't matter much anymore) because when you regulate the worst things away, the base is still bad, but people have less incentive to change the platform for the better ...
Having IE preinstalled was not necessary; OEMs could have (and some did) preinstall other browsers. What happened was that Microsoft decided to base unrelated parts of Windows on IE so that their browser would have to be preinstalled (Windows would not function without it). There was top-level direction on that decision and it was not actually motivated by a specific technical need.
Maybe so, but there is also the fact that a lot of third-party software for Windows used IE simply because it was there, which obviously ate the market share of other browsers.
