They have plenty of ad space with their MSN network and all the others. Once that space is exhausted, they'll be coming for us.
The program is ContentAds, and it should be hitting beta sometime in 2006. I would bet it will start US only, as AdCenter did.
Great to hear potential competition for AdSense! This can only mean good things for us all, when the three companies jostle it out for more publishers, and eventually, advertisers. But I really hope that their betas could be extended to reach out to the world, so that I can get started testing the different programs out!