Microsoft says it’s wrong to call Game Pass ‘degraded’, responding to FTC | VGC

Microsoft has responded to The Federal Trade Commission’s (FTC) claim that its recently announced Game Pass price increases are harming consumers, following the completion of its Activision Blizzard deal.

In a court filing made earlier this week, as part of its appeal against the $69 billion acquisition, the FTC highlighted Microsoft’s new Game Pass tiers, which include a price increase for Ultimate and a new Standard tier that doesn’t include day one releases.

It claimed the price increases were “exactly the sort of consumer harm” it tried to stop by fighting the company’s acquisition of Activision Blizzard. It also labelled the new Standard Game Pass tier – which removes day one releases – “degraded”.

Responding to The FTC in its own filing on Friday, Microsoft says it’s wrong to call its offering “degraded”, since the Standard tier is allegedly replacing the Game Pass for Console offering, which did not include online multiplayer.

“Earlier this month, Microsoft announced changes to its gaming subscription service, Game Pass, to provide consumers valuable options at different price points,” it says. “Microsoft is offering a new service tier, Game Pass Standard, which offers access to hundreds of back-catalog games ‘and multiplayer functionality for S14.99/month.

“It is wrong to call this a ‘degraded’ version of the discontinued Game Pass for Console offering. 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).

“While Game Pass Ultimate’s price will increase from $16.99 to $19.99/month, the service will offer more value through many new games available ‘day-and-date.’ Among them is the upcoming release of Call of Duty, which has never before been available on a subscription day-and-date.”

Microsoft goes on to claim that the FTC is trying to shift focus to the subscription market, now that Microsoft has alleviated regulatory fears it would make Call of Duty exclusive to Xbox, and claimed that it is “common for businesses to change service offerings over time”.

“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 continues. “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.

“While the FTC has now tried to shift focus to its alleged subscription market, its letter does not map onto its arguments below.

“Setting aside that it is common for businesses to change service offerings over time, the FTC case in all of its alleged markets has always been premised on Vertical foreclosure, that Microsoft would withhold Call of Duty from rivals and therefore harm competition.

“But even in the alleged subscription market, Call of Duty is not being withheld from anyone who wants it. And there remains no evidence anywhere of harm to competition: Sony’s subscription service continues to thrive, even as they put few new games into their subscription day-and-date, unlike Microsoft.

“The transaction thus continues to benefit competition and consumers—exactly what the district court correctly found.”

Previously, The FTC alleged that Microsoft’s decision to make mass layoffs earlier this year contradicted previous statements it made in court about how it planned to run the Xbox business if it acquired Activision Blizzard.

Microsoft’s lawyers later responded to the FTC’s claim, saying its “factual assertions are incomplete and misleading”.