Microsoft Corp (NASDAQ:MSFT) issued a response to the Federal Trade Commission's (FTC) complaints concerning recent modifications to Xbox Game Pass, including price hikes and the discontinuation of the console-only tier.
This move comes after the FTC filed a letter with the U.S. Court of Appeals last week, arguing these changes exemplify the consumer harm it warned about during the fight against Microsoft's acquisition of Activision Blizzard.
In a letter disclosed by The Verge's Tom Warren, Microsoft's legal team characterized the FTC's claims as "misleading" and indicative of the agency's persistent efforts to "reinvent its case on appeal."
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
Controversy Over Xbox Game Pass Changes
The FTC's principal concern revolves around Microsoft's discontinuation of the Game Pass for Console and the introduction of a new Standard tier that lacks day-and-date launches. The FTC contends this shift represents a "degraded" product, potentially harming consumers.
Microsoft countered this assertion by highlighting that the Standard tier offers more value than the previous console-only option. Priced at $14.99 per month, the Standard tier includes a catalog of Game Pass games and multiplayer functionality. By contrast, the former Game Pass for Console provided only a game catalog, with multiplayer features sold separately, totaling $20.98 per month.
"It is wrong to call this a 'degraded' version of the discontinued Game Pass for Console offering," Microsoft stated in its letter.
FTC's Shifting Focus
Microsoft further criticized the FTC for shifting its objections regarding the merger to focus on subscription services, an aspect the commission had "barely mentioned at trial."
The core of the FTC's case was initially built around concerns of vertical foreclosure, suggesting Microsoft might withhold Call of Duty from competitors, thereby harming market competition.
"Setting aside that it is common for businesses to change service offerings over time, the FTC's case in all [emphasis original] of its alleged markets has always been premised on vertical foreclosure, i.e. that Microsoft would withhold Call of Duty from rivals and therefore harm competition," the letter read.
Microsoft pointed out that even in the subscription market, Call of Duty remains available to all who seek it, challenging the FTC's assertion of consumer harm. "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."
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Photo: Miguel Lagoa on Shutterstock.