FTC Slams Microsoft For Xbox Game Pass Price Hikes And Degraded Standard Tier
Gamers disgruntled by Microsoft's price hikes to its Xbox Game Pass service are not the only ones taking issue with the company's latest move. So is the Federal Trade Commission (FTC), which raked Microsoft over the coals in a scathing letter to the US Court of Appeals for the Ninth Circuit, both for the price increases and for replacing the cheapest tier with a "degraded product."
The FTC is also taking issue with the timing of Microsoft's reshuffling of its Xbox Game Pass service, noting that the firm is "exercising market power post-merger" with its acquisition of Activision-Blizzard.
"Microsoft’s price increases and product degradation—combined with Microsoft’s reduced
investments in output and product quality via employee layoffs, see FTC’s February 7, 2024,
Letter—are the hallmarks of a firm exercising market power post-merger," the FTC writes in its letter..
In case you missed the announcement, Microsoft recently increased the price of its Xbox Game Pass Ultimate subscription tier from $16.99 per month to $19.99 per month, which as the FTC points out in its letter, results in a 17% year-over-year price hike.
Microsoft's also getting rid of its $10.99 per month Console Game Pass tier, and adding a $14.99 per month Standard tier. In addition to costing more, the Standard tier does not grant gamers access to day-one game releases.
Users of that [Console Game Pass] product must pay 81% more to switch to 'Game Pass Ultimate'. For consumers
unwilling to pay 81% more, Microsoft is introducing a degraded product, 'Game Pass Standard',
at $14.99/month. This product costs 36% more than Console Game Pass, and withholds day-one
releases," the FTC states.
"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 FTC adds.
On top of it all, the FTC appears to insinuate suspect timing on Microsoft's part, saying the price hikes and "degraded" Standard tier coincide with Call of Duty being added to the most expensive tier, "and discontinuing the Console tier will happen shortly before releasing CoD's newest game." That's a reference to Call of Duty: Black Ops 6, which is scheduled to land on October 25, 2024.
The FTC further points out (PDF) in its letter (PDF) that Microsoft promised its acquisition of Activision would benefit consumers by making CoD available on Game Pas the same day it's released on console.
Microsoft acquired Activision-Blizzard for $69 billion in October 2023, having finalized the deal after making concessions to appease various regulatory bodies
