Hadi Partovi, who ran Program Management through the launch of Internet Explorer 5.0, answers on Quora:
Microsoft had decided that the browser war was over, browsers are history, and the new enemy was AOL.
Throughout my time at Microsoft, it has always been sad to see the Internet side define itself more based on who it wanted to compete with (Netscape, AOL, Yahoo, Google), rather than defining its own vision of what it wanted to be.
I remember switching to IE back in the day because it was just a better browser. Then Microsoft, having (illegally) killed Netscape, stopped giving a shit. Then came IE6. And the rest, as they say, is history.