This is “exactly the sort of consumer harm” they said the deal would lead to
The US Federal Trade Commission have slammed Microsoft’srecently announced Game Pass price hikesas “exactly the sort of consumer harm” they claimed would result from the Xbox publisher’snow-completed acquisition of Activision-Blizzard.
In a letter sent to the US Court of Appeals this week,shared around online by Gamesfray, FTC counsel Imad D. Abyad characterises the pricing changes as a straightforward exercise inenshittification.
The letter also points out that the price jump is “inconsistent” with a statement Microsoft made last year that Game Pass wouldn’t get more expensive after Activision-Blizzard’s games joined the roster. Back then, Microsoft argued that “the acquisition would benefit consumers by making [Call of Duty] available on Microsoft’s Game Pass on the day it is released on console (with no price increase for the service based on the acquisition), on Nintendo, and on other services that allow cloud streaming”.
As Kotakucomments, Microsoft could argue here that the price changes aren’t connected to the $68.7 billion acquisition, but part of a larger product strategy. I think it’s safe to say that Microsofthave been thinking about raising Game Pass prices for a while. The timing is certainly rather convenient, however.
The FTC also present Microsoft’srecent enormous mass layoffsin the wake of the deal as another example of the company’s leadership using their vastly expanded market power to steer the fortunes of the whole industry, and make life worse for players. “Microsoft’s price increases and product degradation - combined with Microsoft’s reduced investments in output and product quality via employee layoffs […] are the hallmarks of a firm exercising market power post-merger,” Abyad argues.
The letter concludes that “Microsoft’s post-merger actions thus vindicate the congressional design of preliminarily halting mergers to fully evaluate their likely competitive effects, and judicial skepticism of promises inconsistent with a firm’s economic incentives.” It’s not clear when the court might respond to the letter, or what the outcome might be.
