FTC says I told you judge, I warned you bro, as it unloads on Microsoft for Game Pass price hikes and 'a degraded product' that it says break promises made to seal the Activision merger (2024)

Are you upset about the recent Game Pass price hike? Well, good news: so is the mighty American state. Or part of it, anyway. The US Federal Trade Commission (FTC), the country's antitrust and consumer protection watchdog, has submitted a filing to the Ninth Circuit Court of Appeals in which it attacks Microsoft for "introducing a degraded product" with its new Game Pass Standard tier.

If you're not up to speed, Microsoft announced just over a week ago that it was overhauling its Game Pass subscription tiers across console and PC. Here's a quick breakdown of what changed:

• PC Game Pass got a $2 price hike, going from $10 to $12 a month.
• Xbox Game Pass for Console was replaced by Xbox Game Pass Standard for new subscribers only, which no longer had day-one game releases but does have online multiplayer, and which costs an extra $4 ($11 a month to $15).
• People currently subbed to Xbox Game Pass for Console get to keep it, and its day-one games, for its current cheaper price until they cancel, at which point they'll never get it back.
• Xbox Game Pass Ultimate's offerings were unchanged (so subs still get day-one games), but it got a $3 price hike from $17 to $20 a month.

You don't have to be an antitrust lawyer to realise that's a bit of a raw deal: The whole kit and kaboodle is getting more expensive and some tiers are even losing features in the process.

That's what's gotten the FTC so riled up. In its filing, the agency notes that a current Xbox Game Pass for Console user wanting to keep their day-one games "must pay 81% more to switch to 'Game Pass Ultimate,'" and for anyone not willing to do that "Microsoft is introducing a degraded product," by which it means Xbox Game Pass Standard, which still "costs 36% more than Console Game Pass, and withholds day-one releases."

The filing is just part of the FTC's larger campaign against Microsoft's merger with Activision Blizzard, which finally closed last October. It seems remarkably unlikely—now that Activision and Microsoft are officially intertwined—that the merger will be rolled back, but the FTC's not giving in without a fight.

In the filing, the agency notes "Microsoft’s price increases and product degradation—combined with Microsoft’s reduced investments in output and product quality via employee layoffs," and calls them "the hallmarks of a firm exercising market power post-merger."

It also notes that Microsoft sure forgot to mention this when it was talking a big game about the acquisition giving Game Pass subs day-one access to new CoDs. The FTC says, "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).'"

As far as the FTC is concerned, Microsoft's decision to jack up the barriers to entry to day-one CoD for Game Pass users totally validate its doubt about that, and "thus vindicate the congressional design of preliminarily halting mergers to fully evaluate their likely competitive effects, and judicial skepticism of promises inconsistent with a firm’s economic incentives."

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