In response to criticism from the US Federal Trade Commission (FTC) over Microsoft’s planned price and feature changes to its Game Pass subscription service, the software giant he replied to allegations of product degradation. In a letter to the U.S. District Court for the Ninth Circuit, Microsoft argues that its up-to-date, cheapest tier of Game Pass is a better product for gamers, not a degraded product, because it includes multiplayer functionality.
On Thursday, the FTC filed a brief with the Ninth Circuit Court accusing Microsoft of downgrading its product following its acquisition of Activision-Blizzard. At issue was Microsoft’s removal of day-one access to up-to-date releases for subscribers, which players had under the cheaper, console-only base tier of Game Pass. Under the up-to-date Game Pass Standard tier, which costs $4 per month more than the previous base plan, players get multiplayer functionality but lose access to up-to-date games.
The FTC says this was “the hallmark of a company exercising market power post-merger,” which the FTC said had been a concern since the merger talks began. Microsoft, for its part, disagrees. The company pointed out in its letter to the District Court that at previous prices, what its up-to-date Game Pass Standard service offered was actually more costly.
“It is incorrect to call this a ‘downgraded’ version of the discontinued Game Pass for Console offering,” Microsoft wrote. “This discontinued product did not offer multiplayer functionality, which had to be purchased separately for an additional $9.99/month (for a total cost of $20.98/month).”
Microsoft also noted that Game Pass Ultimate will offer more value to subscribers than before. With the merger, Game Pass Ultimate will now offer day-one availability for up-to-date Activision-Blizzard games, like the upcoming Call of Duty: Black Ops 6. Before the merger, players didn’t have this benefit at all; if they wanted to play Call of Duty games on their release day, they had to purchase them.
Microsoft also noted that the FTC did not seem overly concerned about the Game Pass subscription offer when it attempted to block the merger. Instead, the FTC’s arguments focused on “the theory that Microsoft would keep Call of Duty on Sony’s console.” These concerns proved unfounded, as Microsoft and Sony entered into a 10-year contract to keep Call of Duty titles on PlayStation.
The FTC is appealing the decision that allowed Microsoft to buy Activision-Blizzard, and the letter exchange is another episode in that ongoing saga. Whether the Ninth Circuit will reverse the merger remains to be seen.
