Why? They have no reason to be, and technically speaking they're not even selling to the same crowds (they don't even have the same games). Heck, I doubt Microsoft's even looking at Steam and vice versa, there's no competition to be had. The two simply co-exist, but one's not going to affect the sales of the other.Oh ok. Well considering that these will be available on desktop computers, and presumably the store will be built into Windows, I'd say they are competitors.
They're selling online games to people. If people who are new to gaming on computers buy a computer with windows 8 and find it already has a way of buying games, they don't have to (and therefore may not bother to) look elsewhere to get their fix. If the service is popular, more publishers will want to publish their software on the microsoft service. Hence more games will become available. The more games that become available, the less likely people are to seek out alternative solutions to buying games online...