Phil Spencer Puts Apple’s Money Where His Mouth Is

Thursday, 15 February 2024

The Verge’s Tom Warren landed an interview with Phil Spencer, Microsoft’s Xbox CEO, regarding their (sort of) announcement that four previously-exclusive Xbox games are going cross-platform to PlayStation and Switch:

Launching a few Xbox exclusives on rival consoles feels like the natural next step in Microsoft’s grand plan, but it’s also a risky one: it could undermine the Xbox hardware sales that support Microsoft’s Xbox Game Pass subscription effort and its Xbox ecosystem, forcing Microsoft to go fully multiplatform and become a software-only games company like Sega.

Spencer is all too aware of the risks, but he sees an opportunity to make more money on rival consoles to support Microsoft’s game creation, and ultimately bring games to more players.

One weird aspect of this announcement — hence my “sort of” parenthetical above — is that Microsoft hasn’t actually named any of the four formerly exclusive titles they’re porting to PS5 and Switch.

The whole interview is interesting, and it sure sounds like Microsoft is working on a Steamdeck-like handheld. The strategy sounds a little bit like Warner Bros Discovery putting some of their library content on Netflix. Netflix is to PlayStation what Max is to Xbox? Second-fiddle bends to the market leader. You don’t see rumors of Sony putting PlayStation exclusives on Xbox, and you don’t see Netflix putting any of their original content — no matter how old — on Max.

Toward the end of the interview Warren asks Spencer about Apple and the DMA:

Warren: Some of that regulatory work isn’t done like you mentioned, so what do you think about Apple’s changes for the DMA? And is there room for Xbox Cloud Gaming now on iOS?

Spencer: There’s not room for us to monetize Xbox Cloud Gaming on iOS. I think the proposal that Apple put forward — and I thought Sarah Bond’s comments on this were right on — doesn’t go far enough to open up. In fact, you might even say they go the opposite direction in some way, but they definitely don’t go far enough to open up competition on the world’s largest gaming platform.

We will continue to work with regulators, and Apple and Google, to create a space for alternative storefronts. I’m a big fan of how Windows works, and you’ve got a Microsoft Store on Windows, you’ve got Steam, you’ve got the Epic Games Store, you’ve got GOG. You have alternatives, and I think alternative ways for people to buy things creates goodness for consumers and creators. I think the largest platform for gamers, which is mobile, should have the same.

Sarah Bond is Xbox’s president, and I believe her only comment on Apple’s DMA compliance plans was this tweet:

We believe constructive conversations drive change and progress towards open platforms and greater competition. Apple’s new policy is a step in the wrong direction. We hope they listen to feedback on their proposed plan and work towards a more inclusive future for all.

More than any of the words in her own tweet, what conveyed Microsoft’s actual stance towards Apple’s proposals is the fact that her tweet was a retweet of Spotify CEO Daniel Ek’s diatribe lambasting the whole proposal.

But I don’t understand how Warren let this answer slide. If Spencer thinks Apple’s proposed DMA compliance is a “step in the wrong direction”, and he’s “a big fan of how Windows works”, then why doesn’t Xbox work like Windows works? There’s no Steam or Epic Games Store or GOG on iOS. But there’s no Steam or Epic Games Store or GOG on Xbox. So how in the world does Spencer think Apple should be forced by government regulators to open their platform to these alternative stores when he could snap his fingers and open his company’s own platform, Xbox, to these same stores?

He says “I think the largest platform for gamers, which is mobile, should have the same” rules as Windows, so I think he’s trying to make an argument that different rules should apply to iOS than Xbox because iOS is more popular. But iOS became this popular with all of these rules. It’s not like iOS used to be open, became popular under more open rules for software distribution and digital content purchases, and then Apple closed it down. iOS is more closed than open, but it’s only become more open over time.

If the CEO of Xbox were able to say, “iOS should have the same rules and policies for alternative stores and payments as Xbox”, that would be a credible argument. But it’s ridiculous for the CEO of Xbox to argue that iOS should have similar rules and policies to Windows, when Xbox — another platform from the same company — has rules that are, if anything, more restrictive and exclusive than iOS. It would be ludicrous for Tim Cook or Eddy Cue or Phil Schiller to argue that Xbox should have the same rules as Windows — but they’re not making that argument. Spencer is. And he’s in charge of Xbox!

If he thinks iOS should open up to zero-royalty, zero-fee native app distribution, open up Xbox first. Put your money where your mouth is.