Phil Spencer says ‘Xbox will exist’ even if Activision Blizzard deal is blocked

Microsoft’s head of gaming has said its proposed $69 billion Activision Blizzard acquisition is not a “linchpin” for the future of Xbox, and that the gaming arm will continue to exist even if the deal is blocked by regulators.

Phil Spencer was in the UK this week for talks with the Competition and Markets Authority, following a European Commission hearing in which it defended the proposed deal amid concerns it could harm competition, particularly if it were to make games like Call of Duty exclusive to its platform.

The CMA is in the middle of an in-depth investigation into the acquisition, while it also faces challenges from the European Commission and the US FTC.

Although the deal would be by far Microsoft’s biggest ever acquisition, the corporation makes far more from non-gaming products such as Windows, Office and its cloud services.

The Times asked Spencer what would happen to Xbox should such an important acquisition be blocked by regulators, to which he responded that the gaming business was not dependent on its completion.

“This is an important acquisition for us. It’s not some linchpin to the long term — Xbox will exist if this deal doesn’t go through,” he said.

Much of regulators’ concerns around the Activision Blizzard deal have focused on how it could allegedly reduce PlayStation’s ability to compete given that it would see Microsoft gain ownership of the Call of Duty series, which Sony has called “irreplaceable”.

Spencer said that he was baffled why regulators were seemingly protecting the console firm, which it claimed in a press conference last week controls a 70 percent mark share in the console business.

Microsoft recently said it had offered Sony a 10-year, legally enforceable contract to make each new Call of Duty game available on PlayStation the same day it comes to Xbox.

“Competition is us trying to get stronger,” Spencer told The Times. “I don’t have great rationale for … how better competition in consoles is somehow hurtful for consumers.

“Because to me, having us, Sony, and Nintendo doing well in the console market — all of us with strengths and uniqueness and content and capabilities — gives consumers more choice.

“I’d hate to see consoles go to where phones are where there are only two manufacturers. And, right now, we have three good competitors.”

In addition to regulatory concerns around competition in the console market, potential influence on the cloud gaming market is also being explored. Given the complexity of the investigations, Spencer said he feels sympathy for regulators.

“Most of the time in my career at Xbox as I’ve met with government regulators, there’s been a real lack of knowledge about the games industry,” he said.

“I’ve appreciated spending time with them and in certain cases helping to educate. I think for a lot of the regulators, this is the first time they’ve looked at this industry.”