Microsoft’s acquisition of Activision Blizzard continues to face scrutiny from the United States Federal Trade Commission (FTC). Despite failing to block the $68.7 billion merger last year, the FTC remains vigilant, raising concerns about layoffs and recent changes to Microsoft’s Game Pass service. These ongoing developments highlight the regulatory body’s significant oversight role in this high-profile acquisition.
FTC’s Concerns Over Market Power
The FTC submitted a filing to the US Court of Appeals, stating that Microsoft’s recent price hikes and modifications to Game Pass demonstrate the exertion of market power. The commission pointed out Microsoft’s increased pricing and reduced investments in product quality and output, exacerbated by employee layoffs. According to the FTC, these actions exemplify the consumer harm they predicted from the merger.
“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.” The commission also noted that “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 the FTC has alleged.”
Changes to Game Pass Tiers
Significant changes have been made to the Game Pass service. The base Game Pass tier is being phased out, replaced by the Xbox Game Pass Standard, priced at $14.99. This new tier includes multiplayer support but lacks day-one titles and exclusive discounts for subscribers. Meanwhile, Game Pass Ultimate, which retains these benefits, now costs $19.99 per month. Additionally, Xbox Game Pass Core is available for $74.99 yearly, and PC Game Pass is priced at $11.99.
In previous updates, Microsoft’s Game Pass alterations were met with mixed reactions from users, who expressed concerns about the value proposition and pricing adjustments. The FTC’s recent filing adds to the ongoing debate, focusing on the potential negative impacts on consumers. As the federal appeals court evaluates the FTC’s request to unwind the merger, stakeholders and consumers alike watch closely for further developments.
Microsoft’s acquisition of Activision Blizzard continues to spark controversy and regulatory scrutiny. The FTC’s recent actions illustrate ongoing concerns about the merger’s impact on market competition and consumer welfare. For consumers, understanding the changes in Game Pass offerings and their implications is essential. As the legal and regulatory battles unfold, the long-term effects on Microsoft’s market practices and product quality remain uncertain.
