My guess: Microsoft was probably ecstatic about this. Until it becomes a PR headache (it's just about to start). At that point, Microsoft will probably condemn this as misleading and something they don't endorse. They'll probably cut them off from whatever referral program they are currently on.
I think the toolbar war is one of the most significant yet under reported stories involving the battle for search engine market share.
Where as Google has let third parties distribute their own toolbars and funnel the traffic back via paid search feeds, Microsoft has taken the approach to just changing the default search provider to Bing. When someone downloads an ugly toolbar, its Microsoft's brand that takes a hit, where as no one is associating IAC's toolbars with Google (even though Google is paying them somewhere around $1 billion a year, maybe 70% of that is from toolbars.)
I doubt Microsoft is ecstatic about this, partnerships with other major players such as conduit most likely blow download.com's measly traffic numbers out of the water. Heck I would expect conduit is sending more installs per day than download.com will send a month.
