The US Federal Trade Commission (FTC) has filed a letter in the US Court of Appeals for the Ninth Circuit expressing concern about Microsoft’s recently-implemented Xbox Game Pass price increase and restructure. The letter, as surfaced by Games Fray, strikes a tone of “I told you so” as the FTC alleges Microsoft’s recent moves represent a “product degradation” that is inconsistent with former promises.
As stated by the FTC, Microsoft “promised that ‘the acquisition would benefit consumers by making [Call of Duty] available on Microsoft’s Game Pass on the day it is release on console (with no price increase for the service based on the acquisition).'” The FTC is keen to underline this representation, to make lawmakers aware of implemented changes.
The primary issue, as outlined by the FTC, is Microsoft is now offering day-one game releases like Call of Duty only for Xbox Game Pass Ultimate subscribers, who will now pay a higher cost. Those on the lower tier of Xbox Game Pass are also paying more, with fewer benefits offered.
The FTC has claimed the Xbox Game Pass price increase vindicates its concerns over the company’s planned Activision Blizzard merger, as the organisation believes Microsoft is displaying “the hallmarks of a firm exercising market power post-merger.” It has also pointed to Microsoft’s “reduced investments in output and product quality via employee layoffs” as part of overarching concerns.
Read: Xbox Game Pass has been restructured and repriced
At this stage, the letter filed by the FTC is unlikely to cause major change. It’s additional evidence in the FTC’s ongoing appeal against the merger of Microsoft and Activision Blizzard. Despite the US Court of Appeals still evaluating the FTC’s complaints, the merger was allowed to go ahead in 2023.
When Microsoft began widespread layoffs in early 2024, the FTC issued a similar letter pushing back against the merger, and underlining the harm it was causing. No firm action resulted from this filing, although Microsoft did push back on the narrative, stating the FTC’s complaint ignored the reality of the Activision Blizzard deal.
“In continuing its opposition to the deal, the FTC ignores the reality that the deal itself has substantially changed,” a Microsoft spokesperson said at the time. We expect a similar rebuttal awaiting this new complaint – and have reached out to Microsoft for comment.
Update 20/7: In response to the FTC, Microsoft has filed a letter with the US Court of Appeals for the Ninth Circuit alleging the organisation “presents a misleading, extra-record account of the facts and is a continuation of the agency’s attempts to reinvent its case on appeal.”
It has claimed it’s “wrong” to call the changes to Xbox Game Pass a “degraded” version of its offering, as “the service will offer more value through many new games available ‘day-and-date.'” This includes the addition of the latest Call of Duty, which “has never before been available on a subscription day-and-date.”
“Setting aside that it is common for businesses to change service offerings over time, the FTC’s case in all of its alleged markets has always been premised on vertical foreclosure, i.e., that Microsoft would withhold Call of Duty from rivals and therefore harm competition,” Microsoft stated.
“But even in the alleged subscription market, Call of Duty is not being withheld from anyone who wants it. And there remains no evidence anywhere of harm to competition: Sony’s subscription service continues to thrive, even as they put few new games into their subscription day-and-date, unlike Microsoft.”
“The transaction thus continues to benefit competition and consumers – exactly what the district court correctly found.”
