FTC Criticizes Microsoft Over Changes to Xbox Game Pass Tiers

In a recent court filing, the FTC labeled the new Xbox Game Pass Standard tier as a "degraded product." According to the commission, the adjustments typify the type of consumer harm it had feared would materialize after Microsoft's controversial Activision Blizzard merger. Notably, the Standard tier has eliminated certain perks — particularly day-one game releases—while still commanding a higher price point. This development has sparked concerns about Microsoft leveraging its market power to the detriment of consumers and competition alike.

The new Xbox Game Pass Standard tier is priced at $14.99 per month, a notable 36% price hike compared to the now-retired Console tier, which was available for $10.99 per month. One of the critical differences between the two offerings lies in the exclusion of day-one titles from the Standard tier, a feature that was a significant draw for many subscribers. The FTC argues that this alteration amounts to "product degradation," a term used to describe a decline in service value offered to customers. According to the FTC's filing, this price increase, coupled with the perceived reduction in benefits, exemplifies the adverse effects emerging from Microsoft's enhanced market control following the Activision Blizzard merger.

Adding fuel to the fire, the FTC referenced recent layoffs at Microsoft as indicative of reduced investments in both output and product quality. Traditionally, a company flexing its market dominance often scales back on innovation and consumer-centric enhancements, focusing instead on profit maximization. The commission’s filing suggests that Microsoft's recent truncated consumer offerings and workforce reductions align with such unchecked market power theories. Furthermore, the FTC underscored that these developments directly contradict the assurances Microsoft gave during the merger approval process.

One pivotal point raised by the FTC is the timing of the new tier’s introduction vis-a-vis the upcoming release of Call of Duty: Black Ops 6. Microsoft's previously stated intentions were that the merger with Activision Blizzard would facilitate day-one Game Pass availability of the latest Call of Duty games without a corresponding price hike. The FTC posits that the rapid succession of Game Pass changes and the upcoming game release indicates Microsoft's decision to circumvent its prior commitments while still profiting from elevated subscription fees.

In its defense, Microsoft has vehemently refuted the FTC’s claims, labeling them as "misleading" and an attempt to "reinvent its case on appeal." The tech giant maintains that the new Xbox Game Pass Standard tier cannot be considered "degraded" because it offers multiplayer privileges, a feature absent from the previous Console tier. According to Microsoft, these changes continue to promote competition and consumer benefit. Nonetheless, the FTC's concerns highlight the broader implications of corporate mergers on consumer offerings and market competition, suggesting that the discourse on this issue is far from over. As both entities prepare for further legal wrangling, the future of Xbox Game Pass and its impact on the gaming landscape remain hot topics for industry watchers and consumers alike.