In fact, Microsoft let IE languish for years precisely because they explicitly do NOT embrace the internet. They know that the internet is a platform in direct competition with Windows. They saw that. They "embraced and extended and extinguished" the web browser in order to prevent it from becoming a new platform.
Microsoft did not change direction for the internet, they are the same company pre and post internet and this example should stricken from the literature once and for all.
who remembers trying to get on the internet with win3.1? it was abysmal. it had either horrible tcp/ip support or none at all, i can't remember which. everybody i knew bought trumpet winsock. all microsoft would have had to do, to follow its usual modus operandi, would be to go on pretending that the internet didn't matter. but then win95 came out, and it's tcp/ip support was outstanding. it was actually easier to set up than the unixes of the day. and its various office apps gained the ability to export to html, amongst other internet-friendly advances.
yes, internet explorer is stagnant now, because it no longer serves any purpose for ms to improve it. netscape is already dead, after all.