We ended up with Xanadu's vision of walled gardens. Without all that pesky Xanadu technological innovation. Two-way links, OIDs & tumblers (zippers? Now I forget.), transclusion, micropayements, etc.
Another example of worst is better.
Things moved so fast at the time, it left the impression that Microsoft was slow to react. But actually everything happened within just a few years.
Lots of low hanging fruit in optimizing browser rendering and JavaScript. Google engineers plucked these fruit. Pichai took all the credit.
In an alternate universe, some IE PM focused on making a great, fast browser, Chrome would’ve been killed by Google after not taking sufficient market share to deem worthwhile, and Pichai would be working at Oracle as an L5 TPM.
You also missed the GPs point, the reason Microsoft could be “sleepy dormant” on the web was because they had already won the browser wars and because the dominant platform for a decade. And that wasn’t by accident, it was very much a strategic move to conquer the browser market.
MS missed the tpc/ip train completely and ended up just copy pasting the stack from one of the BSDs in Windows 95 I think, or it wasn't a default install, I forget which.
They were late to the http train and had to give away explorer for free. You can tell how desperate they were since they didn't do the same thing with office.
Then between 1999 and 2012 they completely dominated.
Then they missed the mobile train completely and lost the browser wars. And here we are.
I blame IE being free for the state of the internet we have today. If people were trained to pay for it then we wouldn't have spyvertisment as the only model for it.