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I ask the question.

Why would microsoft want a dedicated browser on their 360?

Not only would it make their console more vulnerable to virus's, hackers etc (which would damage further their reputation for security) it would also limit the control they have over the xbox live service.

The whole point of them running the dedicated services is so they can control the platform, make deals with targeted companies, have better marketing choices when adding new web fuctionality etc and decide what is and isn't on their platform.

It may in someways inconvenience the user however for Microsoft its worth the sacrifice from a business perspective.