On Wednesday, the Federal Trade Commission took aim at Microsoft’s recent price changes for its Xbox Game Pass. Evidence of damages from the merger The agency has filed a new letter about the impact of the Activision Blizzard deal on consumers. Ongoing appeals The company criticized last year’s deal, saying the changes were “exactly what the FTC alleged the merger caused to consumers.”
Despite losing the lawsuit seeking an injunction The FTC ordered Microsoft to freeze its acquisition of Activision Blizzard in July 2023, but the FTC has appealed the decision to the U.S. Court of Appeals for the Ninth Circuit. While awaiting the Supreme Court’s final decision, the FTC has submitted additional evidence to support its claims that the merger will stifle competition in the gaming industry and harm customers, including a letter it filed earlier this year ordering Microsoft to freeze its acquisition of Activision Blizzard. About 2,000 employees laid off With the entire newly acquired team.
Today’s letter (Via Games Fray) attempts to base its argument on Microsoft’s recent messy Game Pass changes, pointing to the fact that Game Pass for Console is being phased out for new and cancelled subscribers and replaced with a more expensive “Standard” bundle that won’t include games releasing on launch days like this fall. Call of Duty: Black Ops 6, It was acquired as part of a deal with Activision, and as a result, only the Game Pass Ultimate subscription, which currently costs $20 per month, will include access to all Game Pass games.
“Microsoft’s price increases and product degradation, coupled with Microsoft’s reductions in investments in production and product quality due to employee layoffs (see FTC’s February 7, 2024 letter), are characteristic of companies exercising market power after a merger.” The FTC writes:They also point out that in documents filed during the trial last summer, Microsoft suggested that the price of Game Pass would not increase as a result of the addition of Activision Blizzard games.
“This acquisition will benefit consumers. [Call of Duty] The company wrote at the time that the game “will be available on Microsoft Game Pass the same day it releases on consoles (there will be no increase in price for the service as a result of the acquisition).” Toured Several websiteand this month’s big price hikes seem to contradict that notion, but Microsoft will likely try to argue that the acquisition wasn’t a direct reinvention, but rather a larger strategic shift in its subscription services business.
“Microsoft’s post-merger actions justify Congress’s plan to temporarily halt the merger to fully assess the competitive effects of the merger and judicial skepticism of promises that are inconsistent with companies’ economic incentives,” the FTC letter concluded. It’s unclear when the final decision on the appeal will be made, and it’s hard to imagine the outcome if Microsoft loses; it would undoubtedly be even messier and more disruptive than the Game Pass overhaul.
