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No MS would not put a game on a console that is direct competition. They put games on DS actually through a publishing deal with THQ if I remember correctly. Maybe now it's just them doing it but it was with THQ. And yes they did that because they had no competition with the DS or GBA so it's not like it hurts them. Only helps them actually.

But a Rare or MS game on the Wii is 99% positive never going to happen unless MS pulls out of the console war and becomes strictly a developer. But if that happened they'd sell Rare anyways.