US regulator laughs at Microsoft's new Game Pass tier calling it a 'degraded product'

The Federal Trade Commission (FTC) isn't happy with Microsoft's decision to increase the price of the Xbox Game Pass subscription.

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The FTC filed a document with the US Court of Appeals for the Ninth Circuit, claiming the decision to increase the price of Game Pass was a move by a company "exercising market power" after its acquisition with Activision-Blizzard. The FTC filing states that Microsoft's price increases and "product degradation," combined with its "reduced investments in output and product quality via employee layoffs," are hallmarks for it exerting its power on the market.

Notably, the filing is part of a larger appeal lodged by the FTC regarding Microsoft's acquisition of Activision Blizzard, which was finalized in October last year. While the $68.7 billion deal is completed, it still has an appeal in the Ninth Circuit Court of Appeals, which has yet to receive a ruling. The FTC calls the new Game Pass subscription tier a "degraded product" and explains its reasoning below.

"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 the FTC has alleged," reads the FTC filing