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FTC gunning for Microsoft again after Game Pass price hikes and sends a letter basically saying, “We did warn you”
Microsoft’s seemingly endless arguments with the FTC (Federal Trade Commission) are back up and running with the government agency highlighting recent changes to the Game Pass subscription service, suggesting that it believes Microsoft is now offering a “degraded product” in order to push people to a higher-priced tier.
We did cover a fiddly workaround last week that could save you from being hit by the price hike for a few months at least, but ultimately, they have you and the FTC wants to point out that they basically warned us this was going to happen when they tried to block the Microsoft / Activision Blizzard merger last year.
A strongly worded letter penned by Imad Abyad, Counsel for the Federal Trade Commission to the U.S. Court of Appeals for the Ninth Circuit in San Francisco, says,
“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, see FTC’s February 7, 2024, Letter—are the hallmarks of a firm exercising market power post-merger.”
It’s not entirely clear that the FTC can actually act on this latest development. It is already appealing the judgment allowing the merger to go ahead, so this letter is likely just additional information rather than a new stance. It is as much a “We told you so” as anything else.
For the FTC’s part at least it does still seem to be watching the Redmond giant with hawk eyes, even if it is unlikely to force a pricing backtrack.
