In a recent filing to the US Court of Appeals for the Ninth Circuit, the Federal Trade Commission (FTC) has sharply criticized Microsoft’s decision to increase the prices of its Xbox Game Pass services. Last week, Microsoft announced price hikes for both the PC Game Pass and Xbox Game Pass Ultimate, along with plans to introduce a new Game Pass Standard tier, which will not offer day-one access to first-party Xbox games.
The FTC has labeled this new Game Pass Standard tier a “degraded product,” emphasizing that new subscribers will no longer have the option to sign up for the $10.99 Game Pass for Console, which includes day-one game access. Instead, the Xbox Game Pass Standard will be available at $14.99 per month, excluding day-one games but including online multiplayer features.
In the filing, the FTC stated, “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. 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.”
This filing is part of an ongoing appeal by the FTC against a district court’s decision not to block Microsoft’s acquisition of Activision Blizzard last year. Microsoft completed its $68.7 billion acquisition in October, but the Ninth Circuit Court of Appeals has yet to rule on the FTC’s appeal.
