This is why Microsoft has to be responsible in its decisions regarding 3rd parties. IE is NOT just an application. It is, de-facto, a piece of infrastructure. Its power is such that a decision to partner or not has the power of life and death over a 3rd party. Where that 3rd party is solely responsible for significant innovation then innovation itself is destroyed.
In the world of web services the power of this application will create a universal gateway to services. The power to invoke a “travel service” or an “auction service” will be bound to IE. This gives Microsoft either a great opportunity to innovate and allow innovation OR a powerful anti-competitive edge.
Lets see which way it goes