It was horrible. But let's keep some perspective on why that sabbatical existed. It wasn't merely because MS had decided they dominated the browser market and didn't need to innovate anymore.
More than anything it was because MS was afraid of continuing IE development. IE is what got MS into all the regulatory anti-trust trouble in the first place, MS was too afraid to make a new mis-step with IE which could land them in even more trouble.
They didn't get in trouble for making a browser. They got in trouble for making it impossible to completely switch to a different browser under Windows. There was absolutely no external influence stopping Microsoft from continuing to develop IE as a standalone product. So yes, it was for that first reason.
More than anything it was because MS was afraid of continuing IE development. IE is what got MS into all the regulatory anti-trust trouble in the first place, MS was too afraid to make a new mis-step with IE which could land them in even more trouble.