The Federal Trade Commission has issued new filing in the U.S. Ninth Circuit Court of Appeals about Microsoft’s recent changes and price increases. In the letter, they said that the new changes “is introducing a degraded product.”
Earlier this month, Microsoft announced that it is increasing the prices for Game Pass as well as introducing a new tier option that won’t include Day One games as part of it meaning that anyone subscribed to the new Standard tier won’t be able to play new Xbox Game Studios titles when they are launch and are released on Game Pass the same day.
The full letter reads:
” The Federal Trade Commission writes to alert the Court to Microsoft’s announced price increases in the multi-game-subscription and cloud-gaming markets which the district court found relevant to the merger analysis. Microsoft is raising the price for its “Game Pass Ultimate” product from $16.99/month to $19.99/month – a 17% year-over-year increase.
Additionally, Microsoft is discontinuing its $10.99/month “Console Game Pass” product. Users of that 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. 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.
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.”
Following the FTC’s initial lawsuit against Microsoft’s acquisition of Activision Blizzard, the FTC tried to revive its lawsuit back in September. The FTC also issued complaint about the mass layoffs that hit Microsoft earlier this year.