FTC calls Xbox Game Pass Standard tier a 'degraded product,' alleges harm to consumers

The Federal Trade Commission alleges that Microsoft's recent decisions with Xbox Game Pass will cause harm to consumers.

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A bit ago, Microsoft announced that it would be making big changes to its Xbox Game Pass multi-game subscription service. Game Pass Ultimate has been raised by $3, from $16.99 a month to the new $19.99 a month price, and Game Pass Console tier has now been removed entirely, and will be replaced with a new higher-cost Standard tier "in the coming months" that removes day-and-date releases and trades that big benefit out with online multiplayer.

These adjustments were caught by the FTC, who is currently appealing a decision made by Judge Jacqueline Scott Corley in July 2023 that had led to the closure of the $70 billion Microsoft-Activision merger. In a new filing, the FTC alleges that these price hikes, in tandem with the new "degraded" Xbox Game Pass Standard product, will cause harm to consumers.

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A closer look at Xbox Game Pass Ultimate pricing trends from launch to present.

The filing reads:

"The Federal Trade Commission writes to alert the Court to Microsoft's announced price increases in the multi-game subscription and cloud-gaming markets, which the district court found relevant to the merger analysis. Microsoft is raising the price for its Game Pass Ultimate product from $16.99/month to $19.99/month--a 17% year-over-year increase.

"Additionally, 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 that 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--are the hallmarks of a firm exercising market power post-merger.

"Importantly, Microsoft's actions are inconsistent with Microsoft's representations below.

"Microsoft's price increases coincide with adding Call of Duty to Game Pass' most expensive tier, and discontinuing the Console tier will happen shortly before releasing Call of Duty's newest game."