[jordo37]

Microsoft has substantial investment in advertising solutions and advertising companies of their own so 4) doesn't really work. Appnexus is just one example of an advertising startup that has taken considerable investment from MS in recent years and having DNT on by default would be very bad for their business.

[AnthonyMouse]

4) is about image rather than reality. Microsoft likes to portray themselves as the people who demand your money instead of your privacy (even though they really take both). And people continue to think of Microsoft as a software company rather than an ad broker notwithstanding their nontrivial advertising interests as you point out.

This leaves them in a position that allows them to paint advertisers as unscrupulous and have the taint stick more to their competitors than to themselves, which they've clearly been taking advantage of.

Moreover, if Microsoft could somehow eliminate all of internet advertising for everyone, I expect they would do it. Because as much as it would hurt Microsoft, it would destroy their most viable competitors. And it's more profitable (at least in the short to medium term) to have a monopoly on a market a fraction of the size than to have your margins and market share continually eroded by vigorous competition.