Steam is still pretty much undisputed leader in today's games marketplace and it's a very comfortable position worth billions of dollars. And that's just on one platform.
NVIDIA likes it because it could justify higher prices for graphics cards. Suppose somebody plays 2 hours a game a day and they can justify an $1800 graphics card for that. (Over 3 years it's about $1 an hour, I'd compare that to about $0.45 an hour for the cheapest Azure instance with a less capable GPU)
22 hours a day the card is doing nothing, if other people were gaming on it and it were training neural network models the rest of the time the card could be worth $21,600. It's a throwback to IBM mainframes at the worst but NVIDIA could easily conclude it can't afford to sell 40-series cards to gamers.
Normally we have to let lies and bullshit from corporations wash over us, all we can do is complain on forums and still have to argue with Kool Aid drinkers.
If bullshit over cloud gaming meant Microsoft couldn't get what they wanted then it is payback... Sometimes you gotta learn that actions have consequences.
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Also there is a huge amount of confusion about what "cloud" means. For instance most of Adobe Creative "Cloud" is a set of desktop applications with limited cloud integration. What is has in common with with real cloud products (Salesforce.com, Figma) is that you pay for it with a monthly subscription.
Microsoft would love to just get your money month after month so you can play Assassin's Creed Episode 4215 and Call of Duty: Battle of Bakhmut and they don't care if you as a consumer know what kind of hardware it is running on but you'd better be sure the bean counters are aware that they could sell a "gaming PC" equivalent cloud instance to somebody in Azure for a dollar an hour so the economics can't possibly add up. Yet the cloud gaming bullshit still keeps rolling, at the last keynote NVIDIA's CEO was saying kids might game from the back seat of a car but what phone company is going to invest the last 800% of costs to get cell phone coverage in the last 20% of places?