FTC Calls Game Pass Changes “Product Degradation” In Their Microsoft Case Appeal

The FTC has filed a new document on their existing case against Microsoft, in regards to the changes coming to Game Pass.

As reported by TweakTown, the document says:

“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.”

This is not a new case filed by the FTC. FTC already lost their case against Microsoft’s deal to buy Activision Blizzard King at the Supreme Court. Instead, the FTC is filing this as a new fact to reconsider the case with the 9^th Circuit Court.

Florian Mueller, who helped educate us on the Microsoft – Activision deal throughout its regulation around the world, shares new commentary on this on their games_fray account on Twitter:

“More than seven months after the hearing of Dec. 6, 2023, the appeals court still hasn’t ruled on the FTC’s appeal. This is not the first time for the FTC to make a filing during that period in hopes of influencing the decision. Microsoft did so only once.

The FTC argues that the new price structure is all about CoD and contradicts what Microsoft told Judge Corley about there being no price increases based on the acquisition. Note: “based on the acquisition” — they didn’t say there’d be no price increases ever.”

He goes on to say that all parties involved are still waiting on the 9^th Circuit Court, but he shares even more commentary on his personal Twitter account:

“The fact that the 9th Cir. still hasn’t decided *probably* means the judges somehow can’t agree easily on what to do, and that’s why the FTC and recently even Microsoft will still make filings when there’s news that justifies it.

The difference is Microsoft focused on a *legal* development (Supreme Court decision), while the FTC and the class-action lawyers in charge of the gamers’ lawsuit want the appeals court to consider new *facts* (to the extent those factual representations are facts at all). The latter is more difficult to do than the former as the appeals court should normally decide based on the facts that were before Judge Corley more than a year ago.”

Based on this commentary, it seems unlikely that the FTC will be able to use these price changes to affect their appeal against the Microsoft deal. But that doesn’t preclude them from other forms of regulation.

It must be said, if they really wanted to protect the consumers from these price changes, they should just investigate the price changes directly, instead of tying it to their case with the 9^th Circuit. As Mueller noted, it’s been 7 months since the courts took the appeal, and it could drag on for months or even years at this rate.