This is “exactly the sort of consumer harm” they said the deal would lead to
Image credit: Microsoft
The US Federal Trade Commission have slammed Microsoft’s recently announced Game Pass price hikes as “exactly the sort of consumer harm” they claimed would result from the Xbox publisher’s now-completed acquisition of Activision-Blizzard.
Microsoft unveiled global price increases for their console and PC subscription business earlier this month. Amongst other jumps, the price of a PC Game Pass has risen from $9.99, €9.99 or £7.99 per month to $11.99, €11.99 and £9.99. They’ve also canned the Xbox Game Pass For Console package in favour of a new Standard tier for console users, which doesn’t include day-one access to new games, such as the forthcoming Call Of Duty: Black Ops 6. The FTC argue that this latter move, in particular, is evidence of Microsoft using the ActiBlizz deal to strongarm their existing subscribers into paying more.
In a letter sent to the US Court of Appeals this week, shared around online by Gamesfray, FTC counsel Imad D. Abyad characterises the pricing changes as a straightforward exercise in enshittification.
The FTC argue that Game Pass Standard is a “degraded product”, which essentially forces Console Game Pass users to upgrade to Ultimate to get access to the same games. “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,” Abyad writes. The letter notes that “discontinuing the Console tier will happen shortly before releasing CoD’s newest game” – existing Game Pass subscribers will have to change over to one of the new packages on 12th September 2024, with Black Ops 6 releasing on 25th October.
The letter also points out that the price jump is “inconsistent” with a statement Microsoft made last year that Game Pass wouldn’t get more expensive after Activision-Blizzard’s games joined the roster. Back then, Microsoft argued that “the acquisition would benefit consumers by making [Call of Duty] available on Microsoft’s Game Pass on the day it is released on console (with no price increase for the service based on the acquisition), on Nintendo, and on other services that allow cloud streaming”.
As Kotaku comments, Microsoft could argue here that the price changes aren’t connected to the $68.7 billion acquisition, but part of a larger product strategy. I think it’s safe to say that Microsoft have been thinking about raising Game Pass prices for a while. The timing is certainly rather convenient, however.
The FTC also present Microsoft’s recent enormous mass layoffs in the wake of the deal as another example of the company’s leadership using their vastly expanded market power to steer the fortunes of the whole industry, and make life worse for players. “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,” Abyad argues.
The letter concludes that “Microsoft’s post-merger actions thus vindicate the congressional design of preliminarily halting mergers to fully evaluate their likely competitive effects, and judicial skepticism of promises inconsistent with a firm’s economic incentives.” It’s not clear when the court might respond to the letter, or what the outcome might be.
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