The mandown blog has a detailed examination of this announcement. From their summary : "An new press release has been published from Microsoft and ESRI which talks about Microsoft's Virtual Earth's integration into ArcGIS 9.3. Microsoft and ESRI today announced that ArcGIS users will have access to the mapping and imagery content provided by the Microsoft Virtual Earth platform inside ArcGIS Desktop and ArcGIS Server."
Read more of this story at Slashgeo.