Microsoft’s got an uphill battle going on with Games for Windows. It’s got to try and take Steam’s market share by battling Microsoft’s poor reputation among many gamers, while still keeping the major publishers happy, who’ve been working with Microsoft for years.

At the Game Developers Conference in San Francisco, Ars Technica had a chat with Microsoft to try to find out what the company is planning – both in the looming update and also in the future.

First of all, the company wants to ditch the “DRM” tag. Claiming that DRM is designed to stop copying, not piracy, Microsoft is calling their new service “IP protection” instead. It all operates in the cloud – with games only working if you’re logged in and the account you’re logging in with has a license.

One potential consequence that Microsoft brings up is that game publishers could then happily publish their software for free download anywhere – even Bittorrent – so long as there was a central place for users to apply licenses to their account.

Of course this won’t work for offline titles. Gamers hate having to log in to an online service to play games that have no online components – just look at the reaction to GTA IV. Even so, there are few games released these days that don’t have some sort of multiplayer component, and many that are multiplayer-only.

Other benefits of this approach could be to put settings and savegames in the cloud, too. Gamers needn’t worry about adjusting mouse sensitivity, controls or other info in on several PCs – they just do it once and the game will adjust on any computer. Similarly, with save games you could theoretically go to a friends house and continue exactly where you left off.

All this raises the spectre of Steam, which is a competing distribution and gaming social network created by Valve. Its DRM is mostly accepted as a kind of ‘benevolent dictator’ system by gamers – they trust Valve not to screw them over, and Valve hasn’t. So far.

It seems unlikely that gamers will offer the same trust to Microsoft, due to the company’s reputation. It’ll be difficult for Microsoft to make things any easier, either – a suggestion that it could be tied into Windows 7 was met with a quick “Say hello to my friend, the Department of Justice.” response from the company, referring to the much-publicised spats with US government regulators.

What I’d like most from Games for Windows is interoperability with Steam. I want to be able to do everything I can do in Steam, including all the games I’ve bought on the platform, via Windows. That way, my choice of platform relies solely on the quality of the interface, not which publishers have done deals with which provider.

But I suspect that’s an idyllic goal. In reality, the chances of Steam jumping into bed with Microsoft, or anyone else for that matter, are near zero. They have the goodwill of the users and the big-name publishers. They don’t need anyone else. I’d argue that Games for Windows is simply a waste of Microsoft’s time.

What do you think? Are there any redeeming features to Games for Windows that Steam doesn’t offer? Perhaps the Xbox 360 matchup, but I’m not convinced that’s enough. Let us know what you think on Twitter by messaging @techdigest.