Internal emails from the U.S. Federal Trade Commission (FTC) v. Microsoft case show that Microsoft has been planning to stream PC games through cloud computing. Microsoft already offers streaming games through its Xbox cloud gaming service, but that's limited to Xbox games because the servers run dedicated Xbox Series X chips, and Microsoft has been working on leveraging its Azure servers to stream PC games through Xbox Cloud Gaming.
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Microsoft CEO Satya NaDELLa sent an email to Xbox CEO Phil Spencer, Microsoft cloud gaming director Kareem Choudhry and Xbox creator experience director Sarah Bond in July 2021 after rumors emerged that Google would turn Stadia into a white-label cloud gaming service for developers to run games.
"It looks like they (Google) will have the upper hand because their service is more of a general Linux virtual machine + network... But I think we will do the same thing for GamePass PC - right?" Nadella asked. Spencer quickly responded in just over an hour, offering his thoughts on Stadia and confirming that Microsoft is working on an Azure solution for streaming native PC games from the cloud.
"Google has the ability to reuse their Linux cloud hardware, and yes, when we stream PC-native games from Azure GPU SKU, we'll have more reuse scenarios to recoup the cost," Spencer said, referring to the ability to offer similar white-label cloud gaming services to developers and publishers.
"Phil is right. Sarah Bond and I are working with Jason Zander's team to develop a suitable Azure SKU... as part of a suite of services that will address the demand we are seeing from external customers for IAAS and run our xCloudPC streaming stack," Choudhry said in the email chain. In the court documents, part of the Azure SKU was redacted, but it is clear that Microsoft began working on streaming PC games through cloud computing in July 2021.
Over the past year, work within Microsoft on Xbox cloud gaming has slowed. Microsoft had previously promised that Xbox cloud gaming would support users' existing game libraries by the end of 2022, but this promise has never been fulfilled. Microsoft also canceled plans to launch a dedicated subscription version of Xbox cloud gaming.
But earlier this year, Microsoft hinted that it would offer PC games on Xbox cloud gaming. British mobile network EE has signed a 10-year agreement with Microsoft to provide Xbox PC games to EE users, but EE does not currently provide streaming services. It's possible that EE is building a service, but it's more likely that Microsoft is leveraging its Azure service to stream PC games. Microsoft has been publicly testing mouse and keyboard support for Xbox cloud gaming, but so far only supports Xbox console games.
Elsewhere in this particular internal email chain, Spencer also offered his thoughts on Stadia in July 2021. "To be honest, I think Google is trying to turn Stadia into a Google Cloud SKU and take away their first-party consumer service," Spencer said. "Google is a huge and aggressive competitor, but I'm honestly surprised by their lack of progress on Stadia. Our number one competitor to date is actually NVIDIA with GeForce Now. But we've been looking at Google and Amazon's Luna (which is also struggling)."
Nearly a year after Spencer's email, Google announced that it would shut down its Stadia service in January 2023.