Following Microsoft’s much-derided recent decision to once again revisit its Xbox/Game Pass subscription model and introduce a new mid-tier membership option while scrapping Game Pass for Console and hiking the price of Game Pass Ultimate to accommodate the addition of day one Call of Duty releases, the Federal Trade Commission (FTC) has once again jumped back into the conversation with a big ol’ “We told you so!”
The agency, which is still in the midst of appealing the court’s decision last year to allow Microsoft’s $69 billion USD acquisition of Activision Blizzard, wrote in a letter to the U.S. Court of Appeals for the Ninth Circuit, that these changes to Xbox Game Pass represent product degradation and are “exactly the sort of consumer harm” that it had warned about in its case against the merger.
“Product degradation—removing the most valuable games from Microsoft’s new service—combined with price increases for existing users, is exactly the sort of consumer harm from the merger the FTC has alleged,” the letter reads.
“Microsoft’s price increases and product degradation—combined with Microsoft’s reduced investments in output and product quality via employee layoffs, are the hallmarks of a firm exercising market power post-merger.”
“Importantly, Microsoft’s actions are inconsistent with Microsoft’s representations below,” it goes on to add. “Microsoft promised that ‘the acquisition would benefit consumers by making [CoD] available on Microsoft’s Game Pass on the day it is released on console (with no price increase for the service based on the acquisition).’”
the FTC is calling Microsoft's new Xbox Game Pass Standard tier a "degraded product" in a filing with the US Court of Appeals for the 9th circuit. The FTC claims Microsoft is "exercising market power post-merger" of Activision Blizzard pic.twitter.com/Q5tYMAKoN2
— Tom Warren (@tomwarren) July 18, 2024
In a statement, shared here by Verge’s Tom Warren, Microsoft has hit back at the FTC’s comments, saying that it’s wrong to call Game Pass Standard a “degraded” version of the now-discontinued Game Pass for Console subscription. The company argues that despite the lack of day one releases, having multiplayer rolled into the Standard tier still represents a saving and better overall value compared to subscribing to both Game Pass for Console and Game Pass Core/Xbox Live Gold – though I’m not convinced anyone was doing that.
Microsoft also argues that the FTC is only now focusing on subscription, and that its original case was based around the idea that the company would withhold Call of Duty from its competitors. It takes some time out for a bit of thinly-veiled shade as well, saying that “Sony’s subscription service continues to thrive, even as they put few new games into their subscription day-and-date, unlike Microsoft.”
Microsoft has responded to the FTC’s filing about Xbox Game Pass price increases. It calls the FTC’s letter a “misleading, extra-record account of the facts” and says the FTC is wrong to call Game Pass Standard a “degraded” version because it includes multiplayer https://t.co/ocS9yfwSix pic.twitter.com/QXUoViUpoL
— Tom Warren (@tomwarren) July 19, 2024
