In context: The FTC is once again looking into Microsoft’s conduct following its Activision acquisition. The regulators filed a motion flagging its recent price hike and service restructuring as “hallmarks of a firm exercising market power post-merger,” calling the new Game Pass Standard tier a “degraded” product. Microsoft has now fired back in a letter to the US 9th Circuit Court of Appeals.
The crux of Microsoft’s argument is that despite raising prices on the higher Game Pass tiers, the restructuring improved value for gamers. The new $14.99 per month “Game Pass Standard” subscription provides access to a library of older game titles and online multiplayer functionality – a feature previously requiring a separate $9.99 monthly subscription.
“It is wrong to call this a ‘degraded’ version of the discontinued Game Pass for Console offering,” the company stated in its letter to the court. “That discontinued product did not offer multiplayer functionality, which had to be purchased separately for an additional $9.99/month (making the total cost $20.98/month).”
Redmond’s lawyers also positioned the $3 increase for Game Pass Ultimate (now $19.99/month) as a value-add, with Microsoft promising the inclusion of new hit game releases like Call of Duty on launch day – a first for the subscription service. Microsoft also called out the FTC for pivoting its focus to the Game Pass subscriptions after the company had eliminated the threat of making titles like Call of Duty Xbox exclusives through a binding agreement with Sony.
Microsoft has responded to the FTC’s filing about Xbox Game Pass price increases. It calls the FTC’s letter a “misleading, extra-record account of the facts” and says the FTC is wrong to call Game Pass Standard a “degraded” version because it includes multiplayer pic.twitter.com/QXUoViUpoL
– Tom Warren (@tomwarren) July 19, 2024
“The FTC barely mentioned subscription at trial, instead focusing on the theory that Microsoft would withhold Call of Duty from Sony’s console,” the letter reads. “The district court correctly rejected that theory, which is now further eroded by Microsoft and Sony’s ten-year agreement to keep Call of Duty on PlayStation – a contract Sony was ‘thrilled’ to enter.”
Microsoft counsel concludes by stating that there remains “no evidence anywhere” of harm to competition and that Sony’s subscription service remains thriving despite lacking new day-one game releases.
From a gamer’s perspective, some of Microsoft’s logic doesn’t add up. The bragging about online multiplayer – a standard, free functionality on PC and included in Sony’s PSN subscription for day one – as a valid selling point feels outdated in 2024. Microsoft citing the $20.98 value of the previously separate Game Pass for Console and Xbox Live Gold subscriptions when the new $19.99 Game Pass Ultimate price is now just a dollar less than that combined total is equally baffling.
Whether these arguments sway the court remains to be seen. However, Microsoft has made it clear they won’t go down without a fight as regulators intensify scrutiny around the game subscription market.