[UPD] FTC accuses Microsoft of "product degradation," criticizing recent Game Pass price hike
The US Federal Trade Commission (FTC) is going after Microsoft with new accusations. The regulator believes that the company is violating the promises made before the acquisition of Activision Blizzard.
Call of Duty: Black Ops 6
On July 18, the FTC sent a letter to the US Court of Appeals for the Ninth Circuit (first reported by The Verge), criticizing Microsoft’s decision recent to increase Game Pass prices.
The Ultimate subscription tier will go from $16.99 to $19.99 per month (+17.6%) for existing subscribers starting September 12. In addition, the company will replace Game Pass for Console with Game Pass Standard. Not only the new option will have a higher price ($10.99 vs. $14.99), but it won’t include day-one games.
According to the FTC, removing the most valuable games from Xbox’s subscription service is a “product degradation” that causes harm to consumers.
“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,” the filing reads.
The FTC also noted that the price increases coincide with adding Call of Duty to the most expensive Ultimate tier and contradict with Xbox’s promise 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).”
UPDATE (July 20): In its response, Microsoft called the FTC’s complaint “misleading.” The company claimed that the new Game Pass Standard tier can’t be considered a “degraded” version of Game Pass for Console and that “while Game Pass Ultimate’s price will increase from $16.99 to $19.99/month, the service will offer more value through many new games available ‘day-and-date.’ Among them is the upcoming release of Call of Duty, which has never before been available on a subscription day-and-date.”
Microsoft has been fighting with the FTC since December 2022, when the US regulator filed a lawsuit to block the then-proposed acquisition of Activision Blizzard. The company won the case in July 2023, with the judge also pointing at its commitment to keep Call of Duty on PlayStation for 10 years on parity with Xbox.
Although Microsoft eventually closed the $68.7 billion deal (its total cost amounted to $75.4 billion) last October after getting approval from other regulators, the FTC is still trying to fight the corporation in the US jurisdiction.
