Want to see a great example of monopolistic practices? It’s playing out in Browser Wars 2.0.

Most of us have by now realized that much of the web’s innovation is happening within the browser, as part of the migration from desktops to in-the-cloud computers. Adobe’s Flash already has close to 100% installation on browsers. But with AIR, the desktop version of Flash, they’re really mowing Microsoft’s lawn.

So it’s war, and Microsoft is attacking Adobe’s Flash plug-in in return. Redmond needs to own the video and Rich Internet space, and to do that, it has to defeat Adobe, replacing Flash with Silverlight.

This is a three-pronged strategy, and folks predict it’ll work.

The first strategy is go embrace developers familiar with Microsoft’s tools. If, as Techcrunch says, this is a developer battle, then Microsoft’s got legions of .net-trained coders ready to run.

The second is to make media publishers happy. Microsoft has already pleased the media magnates with High-bandwidth Digital Content Protection (HDCP) which encrypts video from the disc to the screen. In Silverlight’s case, it has a variety of features, such as interstitial ad insertion, that make it publishers and advertisers love.

The third strategy is to get it onto desktops. I had an installation CD in my Web2Expo conference bag (didn’t those go out with AOL?)

And this is where monopoly comes in.

When you try to install a desktop app (like Twitter app Twhirl) on Windows. Because Windows doesn’t know what to do with the .air file extension, it asks what to do:

If you use the web to find it, you go to Microsoft’s site, which also doesn’t know what .air stands for:

Clearly, they’re not making it easy to run .air applications. But they’re all about the Silverlight. If you ask microsoft.com for something that doesn’t exist, you get Microsoft’s 404 page. And look at that text in the upper left corner: Maybe you were really trying to install Silverlight, and just didn’t know what to type?

Monopolistic behavior is subtle, and it’s these little advantages that mean Microsoft’s desktop dominance shouldn’t be discounted. It’s a sign that people who run web applications — and are just now coming to terms with Flash and event monitoring — need to be prepared for another round of plug-ins and wavering standards.