Meet Microsoft games chief Phil Spencer, who helped drive $69 billion Activision deal
Phil Spencer, chief executive officer of gaming at Microsoft Corp., center, arrives to court in San Francisco on June 28, 2023.
Shelby Knowles | Bloomberg | Getty Images
When Phil Spencer took the helm of Microsoft’s gaming division in 2014, he and newly appointed CEO Satya Nadella weren’t sure if the company should keep investing in the Xbox, which was losing to Sony.
Less than a decade later, Spencer and the Xbox are at the center of the software company’s largest acquisition ever. With the close of the $69 billion purchase of video game publisher Activision Blizzard on Friday, Microsoft has made clear that gaming is no longer a question mark and is, in fact, central to the company’s future.
“It is an extraordinary amount of money for Microsoft, whose core business is not gaming,” said Don Coyner, who was the first person to work on marketing inside the company’s Xbox unit. Coyner, who left Microsoft in 2018, said he’s confident that smart people at the company can explain the high price.
Spencer’s profile at Microsoft has grown immensely in a short period of time. He told an interviewer from gaming website Shacknews in 2020 that he only got to become head of Microsoft’s gaming division because so many other people had left, and he was still there.
Activision marks one of the priciest deals ever in technology. In addition to the hefty costs, it’s also been extremely time-consuming.
Regulatory pushback from the European Commission, the executive body of the EU, and agencies in the U.S. and U.K. kept the deal at bay for nearly 21 months and forced Microsoft and Activision to extend the deadline to close, which had been mid-July, by three months.
There were numerous moments of uncertainty along the way. In July, Spencer sat in on five days of hearings before a federal judge in San Francisco, who ultimately denied the Federal Trade Commission’s attempt to quash the deal. The FTC took its effort to an appeals court, which refused to grant a motion that would have temporarily stopped the transaction from closing.
Until now, gaming has been a small piece of Microsoft and a relatively slow grower. Revenue increased 1% in the latest quarter, while the company as a whole grew by about 8%. In the most recent fiscal year, gaming revenue was $15.5 billion, accounting for 7.3% of total Microsoft sales.
Rather than ceding the market to Sony and Nintendo, Microsoft’s highest-ranking managers decided to sacrifice most of the software maker’s $111 billion cash pile on a game company.
Bobby Kotick (L), CEO of Activision Blizzard at the Allen & Company Sun Valley Conference on July 11, 2023 in Sun Valley, Idaho.
David A. Grogan | CNBC
Spencer has been vocal in touting Activision’s strengths and was a key force in driving the deal. He’s enjoyed a yearslong relationship with Activision CEO Bobby Kotick, even though the companies have had some tense moments. For example, Microsoft failed to secure the publisher’s titles for the subscription-based Game Pass library during negotiations in 2020.
In November 2021, Spencer approached Kotick and said Microsoft was interested in discussing strategic opportunities between the two companies. His outreach came just three days after The Wall Street Journal reported that Kotick hadn’t told his board what he knew about misconduct inside the company. Activision shares tumbled 11% in the next three trading sessions.
According to a regulatory filing, Spencer asked if Kotick would talk with Nadella, and Kotick agreed. The CEOs spoke the next day, and Nadella conveyed Microsoft’s interest in buying Activision. Some 59 days later the two companies announced their intent to combine.
Microsoft didn’t make Spencer available for an interview.
From intern to boss
Spencer arrived at Microsoft as a software development intern in 1988. Two years later, after graduating from the University of Washington with a bachelor’s degree in technical and scientific communication, he accepted a full-time job at the company as an engineer. He worked on Encarta, Microsoft Money, Microsoft Works and other products.
In the early days of Xbox, Spencer directed an internal game development studio, and in 2008 he took over all of its studios. In 2014, following the launch of the Xbox One console and the appointment of Nadella as CEO, Spencer took charge of Xbox.
Spencer has long understood the importance of top-shelf content. He was instrumental in getting Nadella onboard with the purchase of Minecraft developer Mojang, which Microsoft acquired in 2014 for $2.5 billion. Minecraft has since become the bestselling video game, with more than 300 million copies sold as of this week.
Spencer also took on a big role in the $8.1 billion purchase of ZeniMax Media, the publisher of Doom and Fallout games, in 2021. And at one point he was working on a bid for Warner Bros. Games, whose titles include the Batman: Arkham games, he told two marketing executives in a 2020 email. That deal never materialized.
Spencer and his Microsoft peers then turned to mobile gaming. They considered FarmVille publisher Zynga, Pokemon Go developer Niantic and others before going much bigger with Activision Blizzard.
“Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile,” Microsoft said in its press release announcing the deal. While Activision is known for franchises such as Call of Duty and Overwatch, it also publishes Candy Crush puzzle titles that are among the most popular games on Android and iOS.
Spencer, a lifelong gamer, plays Candy Crush, he said during the July hearings. In total, he plays video games for about 15 hours per week, he told Bloomberg in an interview last year. He’s a fan of Banjo-Kazooie, a game from Microsoft’s Rare studio, and Halo Infinite. In 2021 he played Bungie’s Destiny 2 while another participant streamed the action live on Twitch.
While Microsoft dominates in PC operating systems and productivity software, Xbox remains smaller than Sony in gaming, even after two decades of battle.
“I feel we are in a huge hole with our games lineup both for platform marketing/differentiation and our Gamepass content,” Spencer wrote in a 2022 email to Xbox executives that was made public in the FTC case. This year Xbox has gained a handful of well-received titles, including Zenimax’s Starfield and Forza Motorsport, published by Xbox Game Studios.
Spencer has also recognized some improvements. In 2020, as Sony revealed details of the PlayStation 5, Spencer wrote in a message to Nadella and Microsoft finance chief Amy Hood, “After almost 12 hours of soaking in their unveil, taking apart their specs and looking at the community responses I just wanted to say that I’m proud of our team.” Microsoft had better gaming hardware, software and services, Spencer wrote.
He likes to recognize the achievements of others.
David Hufford, who works in communications and analyst relations at Microsoft, recalled asking Spencer to speak at an event in 2021 honoring the 20th anniversary of the original Xbox launch. Hufford told CNBC in an email that Spencer declined because he wanted to focus on Robbie Bach, who ran entertainment and devices until 2010, and Jeff Henshaw, an Xbox co-founder.
Hufford said that Spencer “preferred we spotlight” those people, “who played more visible leadership roles back then.” Even Bach, once Microsoft’s chief Xbox officer, couldn’t talk Spencer into offering on-stage remarks, Hufford wrote.
WATCH: Microsoft’s $69 billion Activision Blizzard takeover approved by UK
Correction: Gaming revenue increased 1% in the latest quarter, while the company as a whole grew by about 8%. An earlier version misstated a percentage.
Photo illustration of Nvidia’s H20 chip.
Vcg | Visual China Group | Getty Images
Chip giant Nvidia pushed back Sunday in response to allegations from Chinese state media that its H20 artificial intelligence chips are a national security risk for China.
Earlier in the day, Reuters reported Yuyuan Tantian, an account affiliated with Chinese state broadcaster CCTV, said in an article published on WeChat that the Nvidia H20 chips are not technologically advanced or environmentally friendly.
“When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it,” the Yuyuan Tantian article reportedly said, adding that the article said chips could achieve functions including “remote shutdown” through a hardware “backdoor.”
In response, a Nvidia spokesperson told CNBC that “cybersecurity is critically important to us. NVIDIA does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them.”
Nvidia on Tuesday similarly rejected Chinese accusations that its AI chips include a hardware function that could remotely deactivate the chips, also known as a “kill switch.”
Tensions between the U.S. and China on semiconductor export controls have escalated in recent weeks, even after Nvidia resumed sales of its H20 chip to China. Chinese state media has framed the H20 chip as inferior and dangerous compared to Nvidia’s other chips, while the company has defended its chips.
The company’s resumption of its H20 shipments reversed a previous ban on H20 sales that was placed in April by the Trump administration. Nvidia’s H20 chips — a less-advanced semiconductor compared to its flagship H100 and B100 chips, for example — were developed by Nvidia for the Chinese market after initial export restrictions on advanced AI chips in late 2023.
U.S. export controls on some Nvidia chips are rooted in national security concerns that Beijing could use the more advanced chips to gain an advantage broadly in AI, as well as in its military applications.
Nvidia stock over the past year.
Chinese officials, meanwhile, are pushing for the U.S. to ease export controls on high-bandwidth memory chips as part of a trade deal before a possible summit between U.S. President Donald Trump and Chinese President Xi Jinping, the Financial Times reported on Sunday, citing people familiar with the matter.
Nvidia CEO Jensen Huang has supported Trump’s policies while also lobbying for export licenses for the H20 AI chip. Huang has said he wants Nvidia to ship more advanced chips to China, underscoring his outspoken stance that Nvidia’s chips becoming the global standard for AI computing is ultimately better for the U.S. to retain market dominance and influence over global AI development.
China is among Nvidia’s largest markets. Nvidia took a $4.5 billion writedown on its unsold H20 inventory in May and has warned that its topline guidance for the July quarter would have been higher by $8 billion without the chip export restrictions.
Nvidia shares were up 1% to close at $182.70 on Friday and are up 36% this year.
U.S. President Donald Trump and Apple CEO Tim Cook shake hands on the day they present Apple’s announcement of a $100 billion investment in U.S. manufacturing, in the Oval Office at the White House in Washington, D.C., U.S., August 6, 2025.
Jonathan Ernst | Reuters
Apple shares rose 13% this week, its largest weekly gain in more than five years, after CEO Tim Cook appeared with President Donald Trump in the White House on Wednesday.
Shares of the iPhone maker rose 4% to close at $229.35 per share on Friday for the company’s largest weekly gain since July 2020. The week’s move added over $400 billion to Apple’s market cap, which now sits at $3.4 trillion.
Apple is the third-most valuable company, behind Nvidia and Microsoft and ahead of Alphabet and Amazon.
At the White House on Wednesday, Cook appeared with Trump to announce Apple’s plans to spend $100 billion on American companies and American parts over the next four years.
Apple’s plans to buy more American chips pleased Trump, who said during the public meeting that because the company was building in the U.S., it would be exempt from future tariffs that could double the price of imported chips.
Investors had worried that some of Trump’s tariffs could substantially hurt Apple’s profitability. Apple warned in July that it expected over $1 billion in tariff costs in the current quarter, assuming no changes.
“Apple and Tim Cook delivered a masterclass in managing uncertainty after months and months of overhang relative to the potential challenges the company could face from tariffs,” JP Morgan analyst Samik Chatterjee wrote on Wednesday. He has an overweight rating on Apple’s stock.
Cook’s successful White House meeting also comes two weeks after Apple reported June quarter earnings in which overall revenue jumped 10% and iPhone sales grew by 13%.
In an aerial view, the Tesla headquarters is seen in Austin, Texas, on July 24, 2025.
Brandon Bell | Getty Images
Tesla has been granted a permit to run a ride-hailing business in Texas, allowing the electric vehicle maker to compete against companies including Uber and Lyft.
Tesla Robotaxi LLC is licensed to operate a “transportation network company” until August 6, 2026, according to a listing on the website of the Texas Department of Licensing and Regulation, or TDLR. The permit was issued this week.
Elon Musk’s EV company has been running a limited ride-hailing service for invited riders in Austin since late June. The select few passengers have mostly been social media influencers and analysts, including many who generate income by posting Tesla fan content on platforms like X and YouTube.
The Austin fleet consists of Model Y vehicles equipped with Tesla’s latest partially automated driving systems. The company has been operating the cars with a valet, or human safety supervisor in the front passenger seat tasked with intervening if there are issues with the ride. The vehicles are also remotely supervised by employees in an operations center.
Musk, who has characterized himself as “pathologically optimistic,” said on Tesla’s earnings call last month that he believes Tesla could serve half of the U.S. population by the end of 2025 with autonomous ride-hailing services.
The Texas permit is the first to enable Tesla to run a “transportation network company.” TDLR said Friday that this kind of permit lets Tesla operate a ride-hailing business anywhere in the state, including with “automated motor vehicles,” and doesn’t require Tesla to keep a human safety driver or valet on board.
Tesla didn’t immediately respond to a request for comment.
As CNBC previously reported, Tesla robotaxis were captured on camera disobeying traffic rules in and around Austin after the company started its pilot program. None of the known incidents have been reported as causing injury or serious property damage, though they have drawn federal scrutiny.
In one incident, Tesla content creator Joe Tegtmeyer reported that his robotaxi failed to stop for a train crossing signal and lowering gate-arm, requiring a Tesla employee on board to intervene. The National Highway Traffic Safety Administration has discussed this incident with Tesla, a spokesperson for the regulator told CNBC by email.
Texas has historically been more permissive of autonomous vehicle testing and operations on public roads than have other states.
A new law signed by Texas Republican Gov. Greg Abbott goes into effect this year that will require AV makers to get approval from the state before starting driverless operations. The new law also gives the Texas Department of Motor Vehicles the authority to revoke permits if AV companies and their cars aren’t complying with safety standards.
Tesla’s AV efforts have faced a number of challenges across the country, including federal probes, product liability lawsuits and recalls following injurious or damaging collisions that occurred while drivers were using the company’s Autopilot and FSD (Full Self-Driving) systems.
A jury in a federal court in Miami last week determined that Tesla should hold 33% of the liability for a fatal Autopilot-involved collision.
And the California DMV has sued Tesla, accusing it of false advertising around its driver assistance systems. Tesla owners manuals say the Autopilot and FSD features in their cars are “hands on” systems that require a driver ready to steer or brake at any time. But Tesla and Musk have shared statements through the years saying that a Tesla can “drive itself.”
Since 2016, Musk has been promising that Tesla would soon be able to turn all of its existing EVs into fully autonomous vehicles with a simple, over-the-air software update. In 2019, he said the company would put 1 million robotaxis on the road by 2020, a claim that helped him raise $2 billion at the time from institutional investors.
Those promises never materialized and, in the robotaxi market, Tesla lags way behind competitors like Alphabet’s Waymo in the U.S. and Baidu’s Apollo Go in China.
Tesla shares are down 18% this year, by far the worst performance among tech’s megacaps.
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