Question;
How was Microsoft violating antitrust laws by putting a web browser, something that is free anyway, into Windows?
Answer;
Microsoft Bundled internet explorer into the Operating system without an option to remove it, and then as such the LawSuit.
That is a rather poor description of the problem that drove the case.
At the time Netscape was trying to sell the browser software. So Microsoft bundling a copy of an application so that you had to buy it along with operating system was a case of tying.
Microsoft countered with a manure pond of handing waving that somehow IE was embedded into the OS (it wasn't a separate application and was fundamental OS property/service). It is a freaking application that runs on top of the OS.
Or you can put a framework library of a web browser ( e.g., webkit) on top of the OS. But still not part of the OS. This is also about the point where the term Operating System get marketing speak bastardized to mean the "OS + core app 'free' bundle' you get from the software vendor.
Because it was an application that they tied to the OS they squashed Netscape out of the market since there was no way to make money at it.
[Firefox and mozilla.org is largerly living on the generosity of Google donations. And Apple gets to charge a fraction of OS X sales to help support Webkit development. ] The case also threw a spotlight on Microsoft making PC vendors pay them a tax for every PC shipped and Microsoft play some games that the "dumb civil servants woudn't be able to figure out" that got exposed. The closet of schemes designed to tilt the market into always going their way fell out on the floor.
Apple's iTunes is a "Not Bundled", You must download it yourself. The Software again is Not Bundled with Microsoft's OS.
Fairplay/DRM and iTunes role was another case where could make a tying/bundling case.
The download part is as much the point as much as Apple blocking interoperability. Setting things up so that nobody else can even enter the market is anticompetitive.
If you set up barriers so that even if folks have a better solution they still can't enter that is generally considered anticompetitive.