FTC Attacks Microsoft's Post-Merger Game Pass Price Increases

The FTC says the across-the-board price increases that Microsoft recently announced for its Xbox Game Pass subscription service tiers represent "exactly the sort of consumer harm from the merger the FTC has alleged" when it sought to block Microsoft's merger with Activision. From a report: In a letter to the court posted as part of an ongoing appeal by the FTC in the case, the federal regulator alleges Microsoft's moves are a clear example of "product degradation" brought about by "a firm exercising market power post-merger." The letter's primary focus is on the soon-to-be-discontinued $10.99/month Console Game Pass tier. That's being replaced with a $14.99/month Game Pass Standard tier (a 36 percent price increase) that no longer includes "day one" access to all of Microsoft's first-party titles. To maintain that key benefit, "Console" subscribers will have to spend 81 percent more for the $19.99 Game Pass Ultimate tier, which also includes a number of additional benefits over the current $10.99/month option. The FTC notes that these changes "coincide with adding Call of Duty to Game Pass's most expensive tier." Previously, Microsoft publicly promised that this Game Pass access to Activision's ultra-popular shooter would come "with no price increase for the service based on the acquisition." It's that "based on the acquisition" clause that's likely to give Microsoft some wiggle room in arguing for its planned pricing changes. Inflation is also a sufficient explanation for a large portion of the price increase in nominal terms -- the $14.99 Microsoft charged for a month of Game Pass Ultimate when it launched in 2019 is the equivalent of $18.39 today, according to the BLS CPI calculator.

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