Microsoft would have been broken up by now if Al Gore had have won the 2000 US presidential election. The most damning legacy of George W Bush's presidency is that he caved into an illegal, abusive monopoly that is still operating today.
Carving it up how? The OS side and the addon side? From past experience the only people that lose out when things like that happen are the people who are the ones supposedly being helped, the customer.
So what would have happened if MS had been carved up, you would have to pay ~£70 for the OS (almost certainly the same as you pay today) and another say £50 for all the bits you would have got for free anyway. So instead of just getting a computer you can set up and go for an extra ~£70 (now) you wuold have two options...
1. Pay the £70 and £50 and be out of pocket by £50 but in the same boat as you were before.
2. Pay £70 and spend days finding software to replace the stuff that was taken out, and probably then ending up paying more than £50 to get certain bits of software (as certainly the general population would just go with the big names such as Roxio, Nero etc) to make their computer do what it used to do from the off.
Now you could argue that the Hardware sellers such as Dell would stick in programs to replace the ones missing, but IMO that is no better than what you have with MS at the moment, especially considering that they already provide alternatives now. So all you end up with is a computer and population that ends up more confused, with software that is completly inconsistant with every computer you go on. You may have gone for the £50 microsoft package and use WMP for example, but you friend got his dell with Winamp, and your other friend with itunes, another with realplayer, another with another program... Complete and utter carnage.
The other option would be the majority of people would just buy the £50 add on or (as dell and other vendors do at the moment) everyone will just use one or two big names (for example almost every new pc sold in shops comes with norton or Mcafee) and anticompetativeness would move from microsoft to the next biggest names...
Incomplete analogy. Imagine we only had Panasonic shops on the high street and they prevented competitors shops such as Sony from starting up. Should this be legal because Panasonic got their first?
But again that is incomplete, imagine we had a highstreet full of different shops selling electronics, but everyone started buying from one particular shop. The others started loosing money and were forced to close or move to side streets and the one everyone bought from expanded to take over the stores they left.
That is more the analogy you want. There were (and are) alternatives to MS (as far as I know there were OS types out before microsoft came along). They just couldnt compete and fell by the wayside or became more specialist. The only people to blame about microsofts dominance are the software makers who didn't change with the times.
If you don't like Microsoft you have alternatives, you could use OSX (but apple allow it only on their hardware), Linux (but it's too complicated for the average person and isn't as user friendly), Unix, but that is to specialised, same with the (probably) dozens of niche OS's out there.