FTC v. Microsoft: Phil Spencer says Xbox is not a “robust business” and fails to meet internal targets, and the Activision deal is a way to expand into mobile
Context & Ripple Effects
Phil Spencer's FTC testimony lands mid-trial, after he already told the court that Microsoft's $7.5B ZeniMax acquisition was defensive — a move to stop Sony from locking Bethesda games like Starfield into PlayStation exclusivity. The new testimony inverts that framing: rather than Xbox as a fortress worth defending, Spencer describes a division missing its own internal targets and 'not a robust business.'
The mobile rationale also reframes the dispute with Sony, which Spencer previously accused of opposing the Activision Blizzard deal to protect its dominance by 'making Xbox smaller.' If the deal's true target is mobile via Activision's King business rather than console market share, the FTC's console-centric theory of harm loses some of its force — and Spencer's earlier remark that buying Nintendo would be a 'career moment' shows the ambition was always bigger than consoles.
First-order effects
- Spencer's admission hands the FTC a double-edged exhibit: it undercuts Microsoft's claim that Xbox is strong enough to foreclose rivals, while simultaneously supporting the defense that Microsoft needed Activision to grow beyond a lagging console business.
- The testimony puts Activision's King mobile unit, not Call of Duty, at the center of the deal's stated strategic purpose — a shift from the console-share arguments that have dominated the trial.
Second-order effects
- Sony's position sharpens: if Microsoft's growth plan is mobile-first, Sony's console dominance is less immediately threatened, weakening the 'Xbox gets smaller' opposition narrative Spencer himself advanced in 2022.
- Rival platform holders face a competitor whose stated path runs through mobile and multi-platform services rather than hardware exclusives — consistent with Spencer's earlier claim that platform-exclusive games are fading.
Third-order effects
- The FTC trial is pulling Microsoft's internal performance targets and acquisition deliberations into the public record, setting a template for how antitrust scrutiny exposes the gap between a platform's public posture and its internal economics.
- If the deal closes on a mobile-expansion rationale, big-tech gaming consolidation is likely to be judged less on console market share and more on who controls mobile distribution and ad-driven free-to-play revenue.
The trend: Console makers are repositioning gaming as a mobile-and-services growth market, with antitrust trials increasingly turning on internal performance data rather than public platform rhetoric.