'Xbox will exist' if Activision Blizzard deal falls through, says Microsoft's Phil Spencer

What you need to know

• Microsoft's Phil Spencer recently discussed the company's ongoing battle to get its acquisition of Activision Blizzard approved.
• The deal is facing scrutiny by the UK Competition & Markets Authority, European Commision, and the US Federal Trade Commission.
• Spencer argued that competition is good for the gaming industry and that he's tried to explain that to regulators.
• While he and Microsoft view the deal as important, Spencer noted that "Xbox will exist if this deal doesn’t go through."

Microsoft's planned purchase of Activision Blizzard has faced a litany of looks by regulators. It's been over a year since the deal was first announced, but scrutiny from several governing bodies has slowed the purchase from progressing. The UK Competition & Markets Authority (CMA), European Commision, and the US Federal Trade Commission (FTC) are all looking at the deal.

Phil Spencer, Microsoft's Gaming CEO, recently spoke with The Times about the process of trying to get the deal approved. Spencer was in London to meet with the CMA and his since traveled to Brussels to speak with regulators from the European Commission. His comments shed light on the challenges Microsoft is facing and what will happen if the deal falls through.

“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,” said Spencer.

That statement is the key takeaway from Spencer's conversations. While Microsoft views the deal as important and has worked for months to get it approved, the company does not view the acquisition as the be-all end-all for Xbox gaming.

Despite Spencer's comments, industry pundits reportedly believe that Microsoft could sell of Xbox if the Activision Blizzard deal falls through. Andy Robinson, the owner and editor of VCC news, said on Twitter, "regardless of Spencer's words, I know a lot of industry pundits think MS selling off Xbox is a genuine possibility should this be blocked (I still expect it to go through with concessions)."

Microsoft selling Xbox would be one of the largest stories in the gaming industry. The Xbox brand is about more than gaming at this point. Microsoft has integrated Xbox with Azure and the company uses the gaming platform to drive people to the Microsoft Store. The tech giant has invested billions of dollars into the Xbox brand, including making games playable on the cloud and non-Xbox hardware.

None of that makes the sale impossible, but it would be a massive undertaking by Microsoft and a decision the company would not make lightly.

Spencer also shared his confusion on how some regulators view Microsoft's purchase of Activision Blizzard.

"Competition is us trying to get stronger... I don’t have great rationale for … how better competition in consoles is somehow hurtful for consumers," he said.

"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."

Microsoft's Gaming CEO also explained that the gaming industry is new territory for many 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."

Microsoft has made several efforts to convince regulators to approve the deal, including signing a deal to have Call of Duty appear on Nintendo hardware for 10 years. Microsoft has also agreed to have Xbox games on NVIDIA GeForce NOW.