"When we talk about Mozilla's achievements, obviously Firefox and its incredible growth in market share and so forth is a major one. But another major one is that IE7 happened. Microsoft really felt pressure through the marketplace and through Firefox to come back to the table and improve their browser.

"We're very glad that it wasn't a one-trick thing and that they're continuing to and increasingly investing in their browser, both in standards support and in user experience. That's a great thing for the Web. We dont want to have a monopoly ourselves. They've got a ton of users who can certainly have a better browser than IE7 and we're both working on that."

In its first beta release of IE8 back in March, Microsoft focused more on standards support, as Shaver mentioned, and other tools for Web designers and developers.

The batch of new features with this beta is targeted more toward users. Privacy protection is a big one. From my story:

To help ease concerns with privacy and security on the Internet, Microsoft is introducing "InPrivate Browsing."

It allows a user to start a browsing session during which the history of sites they view, temporary Internet files and so-called cookies - small pieces of code added to a browser for tracking purposes - will not be recorded.

"An example might be you're searching for a surprise gift for a loved one, you're using a shared PC in an Internet cafe," said James Pratt, Internet Explorer product manager.

Some bloggers have nicknamed the feature "porn mode."

A complementary feature is "InPrivate Blocking." It allows a user to see when a third-party content provider might be tracking their activities on the Web. Many sites include content, such as stock prices, advertisements or weather information, from third-parties.

"That's the business model for the Web. That's how the Web is funded today in many cases," Pratt said.

I asked Mozilla's Shaver whether similar features would be baked-in to subsequent versions of Firefox. Private browsing functionality is already part of Safari and can be added to Firefox as one of several extensions developed by the broad community of individuals who work on the open-source browser.

"We really want to make sure that what we do there fits how users think about their privacy," Shaver said. "We want to make sure that if a user wants to be able to sort of retroactively clear, then they shouldn't have to necessarily decide upfront that they're going to have a private browsing session."

He said people are working on it and it will certainly be part of some future version. Mozilla hasn't decided whether it will be part of the next version, Firefox 3.1.