MSFT was even afraid of AOL, Oracle, and others teaming up to offer a home appliance (eg. a net PC) at low prices and undercutting the PC industry. Of course, those partnerships and alliances never did work out. Sun and Netscape hated each other, for example.
Microsoft was even worried Sony would "take over" the home since game consoles were becoming as powerful as PCs. Flash forward a few years: when I used my brother's PS3 in 2010, I couldn't believe how awful the browser was on such a powerful machine.
Hollywood and media companies were also afraid of Microsoft in the 90s. MSFT was making deals with Dreamworks, NBC (ie MSNBC), and others. It really did seem like MSFT had the cash to takeover the world and charge fees everytime a movie needed to be distributed. At one point, early on, Bill Gates suggested people would pay a nickel or dime to view a website.
Then, in the low 2000s, when .Net came out, there was a slide that compared the PC desktop to the WWW. MSFT wanted to offer APIs/languages/abstraction layers for the WWW that were analogous to the MSFT desktop.
The same paranoia people had of MSFT/AOL/Oracle, continues, but the names have change to different companies.