There are a number of folks around the Internets that seem to fundamentally misunderstand the competitive landscape in desktop Web browsers today. The thinking goes like this: Firefox has more than 20% share of global browser usage so how can you say that Microsoft still has an unfair advantage.
I see it a little differently. When the only real competition comes from a not for profit open source organization that depends on volunteers for almost half of its work product and nearly all of its marketing and distribution, while more than half a dozen other "traditional" browser vendors with better than I.E. products have had near-zero success encroaching on Microsoft I.E.'s dominance, there's a demonstrable tilt to the playing field.
That tilt comes with the distribution channel - default status for the OS bundled Web browser.
Downloading is an alternative distribution channel, but not nearly as effective because it costs so much more and has a much lower take rate and while the cost to the OS vendor of bundling its browser as default is zero, the cost of becoming the default bundled browser for any but the OS vendor is completely prohibitive. You can see this clearly on both Macintosh and on Windows. The bundled and default Web browser has the lion's share of the respective desktop with no distribution costs at all, and all other competitors depending on downloads for distribution (with the exception of the completely non-traditional Mozilla project) add up to only a tiny fraction.
Let's take Windows first, but the same applies to Macintosh. On the Microsoft Windows OS, you have Opera, Apple, Google, Maxthon, Avant Force, Netscape, AT&T, Flock, Fenrir, AOL, and probably several other browser vendors that have tried to compete with Internet Explorer over the last few years. None of them have had any real success at taking significant share from I.E. via downloads and thanks to the growth of the Web itself, I.E.'s absolute user growth is outpacing every one of those vendors combined.
Look at Mac. You have Opera, Flock, HMDT, The Omni Group, iCab, and a few others and you add up all their share and it's just minuscule compared to Apple's bundled and default Web browser Safari.
This is not a healthy competitive landscape. Against all odds, an odd-ball organization called Mozilla has had some success in breaking Microsoft and Apple browser strongholds, but no one else has been able to make a real dent.
Some will say "yeah, but there's no money in browsers so it's not a real commercial market anyway." That's simply wrong. There's plenty of money in browsers and that's why most of the browser vendors are in the game (Mozilla is the notable exception.) That there's gobloads of money to be made and there are a dozen vendors or more trying to get a piece of that pie and they are all failing to take significant market share from Microsoft and Apple and while producing competitive and in many cases superior products, is a clear demonstration of a commercial market that's out of balance.
The best channels just cost too much for everyone but the OS vendors where those channels (OEMs) are zero-cost. In a functioning market, vendors producing superior products would take share from vendors producing inferior products. Today that's simply not possible because the cost of the most effective channel for distribution, shipping as the default browser with new computers, for everyone except the OS vendor is prohibitively high.
Now, I have no idea what can be done to fix this imbalance. I don't think there are any easy answers. But that doesn't mean that there's not a problem.
update: And yes, I wholeheartedly agree with Opera's CEO Jon von Tetzchner when he says, "The Internet is just too important to limit the choice in browsers. It's very clear that Microsoft's tying the browser to the operating system has limited choice in browsers for end users." I'd add that with nearly 10% of the computer market, the same applies to Apple's tying of Safari to the OS.
update2: The EU has confirmed the reports.
update3: I've posted a few more thoughts here.