Microsoft and Sony today announce an unusual partnership that will allow their two competitors to partner with cloud-based gaming services. "The two companies will explore the co-development of future cloud solutions in Microsoft Azure to support their respective gaming and content streaming services," Microsoft said. Sony's existing games and content streaming services will also be supported by Microsoft Azure in the future.

Microsoft says that "these efforts also include building better content creation community development platforms," ​​which implies that both Sony and Microsoft plan to partner with future developers and gaming community services. Both companies announce that they will "share additional information as it becomes available". The partnership, however, means that Microsoft and Sony will collaborate on cloud games. That's a pretty big deal, and it's a huge loss for Microsoft's main cloud competitor Amazon.

This also means that Google, a new competitor to Microsoft and Sony, will miss hosting the cloud services from Sony. Earlier this year, Google introduced its streaming service for stadia games and the company will use YouTube to reach the masses. Stadia is a threat to both Microsoft and Sony, and it appears that the companies are merging so that Sony has support for the underlying infrastructure to defend itself. Stadia will stream games from the cloud to the Chrome browser, Chromecast and Pixel devices. Sony already has a cloud gaming service, but Microsoft promises to launch its own xCloud gaming service later this year. Microsoft's gaming boss Phil Spencer has also promised that the company will "make it big" for E3.

In addition to the cloud gaming and content streaming partnership, the two companies will also work together in the Semiconductor and Artificial Intelligence (AI) sectors. These include intelligent image sensor solutions using Azure AI and Sony, which uses Microsoft's AI platform in its consumer products.

"Sony has always been a leader in entertainment and technology, and today's collaboration builds on this innovation story," said Satya Nadella, CEO of Microsoft. "Our partnership brings the power of Azure and Azure AI to Sony to bring new gaming and entertainment experiences to customers."