Are browsers and Operating systems getting closer together?

I recently posed the following question on Linkedin and it caused some quite different views.

Will the Internet Browser and OS slowly merge into one or will competition laws prevent this?

Looking at the competition in the browser market, the evolution of Netbooks and the talk around cloud computing, is there a possibility that in the same way smaller computing devices are merging with mobile devices, browsers and OS's become one and the same? With all the change in the market, will things be viewed differently than simply shipping an OS with a "preferred" browser?

See the answers here