OnLive offers a unique service but Steam has a humongous user base and game selection; both have key assets against the other, but conversely these key assets would be quite remarkable if combined. I imagine that OnLive would like to get Steam's userbase, while Steam would like to get its hands on a technology that could open up new markets. Will these two services be friend or foe? 

neither, steam is going to continue doing what it's doing while onlive falls on its ass and fails.

Steam will dominate the PC market, while OnLive fails miserably.