Backstabbing happens everywhere, unfortunately. The main problem with MS was that it was too profit driven for too many years instead of trying to do what was best for the users. Making profit eventually has a direct correlation to providing consistent quality that is better than the next guy or more consistently better. It all comes back to happiness; customers are happier when they get what they expect (intuitive) and what the need (low bugs, fast), not what they want (shiny UI).
They had some really shitty code. http://www.kuro5hin.org/story/2004/2/15/71552/7795
My fav:
private\ntos\w32\ntuser\client\nt6\user.h:
* The magnitude of this hack compares favorably with that of the national debt.