So it's conjecture. Going by Occam's razor, Microsoft just had no need to innovate because it had no competition.
More ontopic... IE6 was slightly better than Netscape 4, so almost everyone switched to IE6. Just as now Chrome is only slightly better than Firefox to a lot of people (not to me though). And a lot of people are switching to Chrome. If you trust Google (an advertising company) to not play the same tricks as MS did, then good luck with your Google Chrome :). Once Google has a lock on the browser market, who knows what will happen. Another lock-in, and more years of stagnation. Yes, more conspiracy :).
Google has market incentive to improve on the browser's capabilities that Microsoft did not.