https://en.wikipedia.org/wiki/Embrace%2C_extend_and_extingui...
They woke up one day and realized people now consume media through their phone; but they were already unseated at that point (their phone ecosystem, due to tie ins into the Windows system, could not compete in the brand new iOS/android/blackberry world of the time; and shortly after, neither could blackberry)
I believe zuckerberg is branching into anything he thinks might at some point be "the next thing", including VR, because of how Microsoft missed the train.
It seems Microsoft believed they can always throw enough money while playing the long game and get a dominant position (as happened with internet/ie, Xbox, etc) - but it seems this strategy has failed miserably with mobile, tablets and may eventually cost them a lot more dominance.
Still, from my perspective, Microsoft in the 90s seemed as unstoppable and ubiquitous as Facebook does today - actually, it seemed more unstoppable than Facebook, because back then we weren't yet used to the possibility of scrappy startups turning into billion dollar companies overnight.
And I'd also suggest the behavior of Facebook shows this to be their own assessment as well. I'd suggest that the headline is wrong; Facebook beats every rival because anyone who becomes a rival they simply buy; this effect is more important than coopting features because it puts a ceiling on their competition. The feature cooption is more about minimizing the number of companies they may have to buy.
When Microsoft was dominant, basically a PC implied that the operating system came from Microsoft. Very few people had the option of not running DOS or Windows. People would regularly send Word or Excel document and there were no reasonable alternatives to Office to deal with those.
And without the Internet, finding details on how to avoid Microsoft was also hard.
Corel, Word Perfect, Lotus... others.
I'm not sure there's much in history to compare to Google. Their individual market share in search, browsers, ad networks, phones, and email is impressive. But more interesting is the synergy between them.
It scares me a bit how much we rely on them to not abuse that power. Not just in a consumer sense either. Think of some of the slimy things that were done over at Uber for example, like the "God View" app, tracking journalists, etc. If Google wanted to, there's any number of awful things they could do.
As for adding features to browsers, they all did that. Netscape tried to build its business on "looks better in Netscape", and Microsoft simply implemented support for Netscape features (much like it had implemented support for 1-2-3 and WordPerfect features in Office).
There was never any prospect of "a proprietary web owned by Microsoft". In the mid-90s, Microsoft did have plans for a web-like network as a sort of distributed OLE (Blackbird), but quickly went "all in" on the web. The closest was the use of ActiveX controls on the web, but other browser makers could have supported ActiveX if they had wanted to. (Firefox decided against.)
Otherwise, neither Firefox nor Chrome existed when the anti-trust case ended, and there has never been any prospect of Microsoft killing either. It was Netscape that featured in the anti-trust case, and Microsoft won the browser case 2-1 on appeal.
Can we please not indulge in this RMS-esque infantile name calling?
It's just that the rest of us moved to other places and leave them defending their hill.