Government's action did had zero effect against Microsoft. Slap on the wrist. Their monopoly was naturally made irrelevant by the market moving onto the next tech frontier: mobile.
The free market lead to that. Countless startups trying everything under the sun made sure incumbents like Apple or Google had to innovate, acquire and evolve to avoid Microsoft's fate. In a free market there is always a chance a new startup will spring up and upend the order. Tons of VC money are trying exactly that.
The only reason that mobile went the way it did was because Microsoft was so afraid of government Antitrust action that they let Apple survive
Apple survived thanks to Steve Jobs and Steve Jobs alone. He could've built his vision in any company or startup though, when he took over Apple was a few weeks away from bankruptcy.
Without Microsoft Office and Internet Explorer, the Mac would have been dead. Gil Amelio negotiated their continuation (as settlement for the old Look & Feel and QuickTime lawsuits) with Microsoft and Jobs closed the deal by letting up on some of Amelio's demands. Microsoft could have just said no and the Mac would have been useless to both education and business and they would have been dead in weeks as you said.
NeXT would never have built the iPhone, they had given up on hardware.
It’s not possible to know what other factors would’ve or wouldn’t have come into play, who would’ve done what else in this alternate history of yours. It’s just speculation.
And you can't possibly know what would have happened without government Anti-trust pressure on Microsoft.
Microsoft famously made deals with laptop vendors to prevent Dell, HP, and so on from selling computers with any operating system other than Windows: https://en.wikipedia.org/wiki/Bundling_of_Microsoft_Windows
Similarly, Intel stifled AMD by providing financial incentives to vendors who offered no AMD-based products: https://en.wikipedia.org/wiki/Advanced_Micro_Devices,_Inc._v....
Were those government supported monopolistic behaviors? Does the "free market" mean that a competitor could have simply made one company that produced an entire laptop, OS, and CPU from scratch to provide the consumer a cheaper choice?
Why would the "free market" lead to vibrant competition, rather than monopolistic hoarding of power?