MSFT was always about owning the platform. All platforms. The writing was on the wall about mobile devices overtaking desktops/laptops - as it took time for the telcoms to build out faster wireless networks.
Windows CE was supposed to be where iOS and Android are in 2018. They blew that plain and simple.
I'm no iPhone fan, its overpriced and overhyped as a computing device IMO. But, the watershed moment that created today'd mass computing - was the invention of the iPhone. It just obliterated Palm and the WinCE alternatives of the time.
I think the EU was right to do it, because they realised how important the web is. But we didn't really feel the effects. Normal people still used IE, until they didn't.
In the end, I think Microsoft brought the demise of IE on themselves, because of how terrible it was. They couldn't undo that reputation, not even with Edge, which still feels clunky compared to FF or Chrome.
So this example is ambiguous w.r.t. hands-off vs. hands-on regulation at best.
It was not only about the browser as such but a lot of APIs were connected to IE. I don't remember the details but on several projects I worked on you needed IE installed to do stuff that was unrelated to the browser.
Also, Gates's reputation took a big hit with his behavior during the Congress hearings.
All this together caused a lot of harm to MS's image which may not have happened without the DOJ and the EU going after them.