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The FTC has just filed a cautionary report to the US Court of Appeals, citing Microsoft’s recent Xbox Game Pass price changes as hallmarks of “a firm exercising market power post-merger.”
Just last week, Microsoft revealed it was going to be increasing the cost of Xbox Game Pass while also swapping out cheaper tiered options for a “degraded” version, as the FTC calls it. “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.”
With the closures of Tango Gameworks and further Xbox layoffs already giving them a bad look, the FTC says that combined with the “price increases and product degradation” that Microsoft is exhibiting, it’s “exercising market power post-merger.”
The introduction of Call of Duty on Game Pass is also a key feature which, combined with the timings of the pricing changes, suggests that this all contradicts Microsoft’s promise of “the [Activision] acquisition would benefit consumers by making [CoD] 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.)”
The Microsoft acquisition of Activision had long been in the public eye. It had been delayed by almost a year, before the CMA finally approved it. Perhaps they hadn’t assumed Microsoft would contradict its own promises as such.
Cover image via FOX(Pexels)
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