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So here are some "Key Messages" from Microsoft's standards team circa 2003 (doing battle with the Australian parliament no doubt) [Emphasis added]:

• An open standard is a publicly available specification which details certain technical functionality that may be implemented in different products and services.  It is adopted in an open, consensus-based process and must satisfy other criteria for transparency, ease of access, and broad implementation as described below.
• Open standards exist to facilitate interoperability and data exchange across various products and services in a marketplace of multiple, competing implementations, while ensuring that certain minimum requirements are met.
• Other types of standards (e.g., “proprietary standards”) and market-based mechanisms exist and are currently used to facilitate interoperability.  However, open standards ensure the highest level of interoperability across the widest range of competing products and services.

As I argued in my post Office Generations last year, we're in the early stages of the "hybrid phase" of personal productivity applications, when most people will use web apps to extend rather than replace their old Office apps. This phase will play out over a number of years as the web technologies mature, at which point it will become natural to use purely web-based apps (with, probably, continued local caching of data and program code).

What this means is that Microsoft has a good opportunity to maintain Office's dominance during the switchover by pursuing what it calls its "software plus services" strategy. But Microsoft should be anything but complacent right now. Maintaining market dominance does not necessarily mean maintaining traditional levels of profitability. The biggest threat posed by online alternatives may well be to undermine Microsoft's pricing power - a trend we're already seeing in the student market.

The second abusive practice the Commission found Microsoft guilty of is the
deliberate obstruction of interoperability, generally achieved through
arbitrary and willful modification of Open Standards. This makes it
impossible for competitors to write interoperable software. This is to
the detriment of customers, who find themselves locked into the
products of one vendor, the antithesis of competition.

It might look much worse in the light of public statements that
Microsoft will
not even commit to standards that it has proposed itself, such as
the recent Microsoft
OfficeOpenXML (OOXML) format it wants approved by ISO.

The less people talk about the interoperability side of the case, the
better for Microsoft. Otherwise people might connect MS-OOXML to the
fact that Microsoft initiated the standardisation effort in the
workgroup server area to open the market and later started
obstruction of interoperability on its own standard to drive the
innovator out of the market.