According to this article on News.com, Microsoft is beta testing their anti-spyware product based on software from Giant, a small spyware company that they purchased in December. News.com says that the public release of the software will occur sometime in January.
I went looking for a little more information on this regarding pricing and came across this article in Microsoft Watch. Apparently the spyware program will be paired with an anti-virus program from GeCAD that Microsoft purchased in summer of 2003. The spyware and anti-virus product will be sold as a subscription product, but may be bundled into into future Microsoft releases; the code-name for the subscription service is "A1."
I think I'll stick with Spybot Search and Destroy and AdAware, both of which still remain free. I think it's important to note, as I have before, that you need to use both of these programs with each other to effectively clean out everything. In fact, I know people with commercial spyware software that they paid for that still use Spybot S&D and AdAware because their commercial software doesn't catch everything; I wonder if users will find the same kind of experience with the Microsoft subscription product.