That's not exactly what they did. Web browsers identify themselves to the server; that's part of the protocol. If the browser identified itself as "Opera", MSN deliberately served up a broken stylesheet, different from the one it served up to MSIE, that made the page look ugly. When the opera browser was modified to identify itself as "Oprah" (there is no "Oprah" browser), MSN worked just fine. IOW, MS went out of their way to design their product to make their competitor look bad. Incompatible by design and intent.
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Not the first time. From Hard Drive: Bill Gates and the Making of the Microsoft Empire
In the early 80's, Microsoft's Multiplan[now MS Office] lost out to Lotus 1-2-3 in the marketplace. According to one Microsoft programmer, a few of the key people working on DOS 2.0 had a saying at the time that "DOS isn't done until Lotus won't run." They managed to code a few hidden bugs into DOS 2.0 that caused Lotus 1-2-3 to break down when it was loaded. "There were as few as three or four people who knew this was being done," the employee said. He felt the highly competitive Gates was the ringleader.