On Wednesday, the Federal Commerce Fee pointed to Microsoft’s current pricing overhaul of Xbox Recreation Cross as proof of the hurt its merger with Activision Blizzard has had on shoppers. The company filed a brand new letter in its ongoing attraction of final yr’s deal, calling the modifications “precisely the type of client hurt from the merger that the FTC alleged.”
Regardless of shedding its lawsuit looking for an injunction to freeze Microsoft’s buy of Activision Blizzard in July 2023, the FTC appealed the choice with the U.S. Court docket of Appeals for the Ninth Circuit. Whereas it awaits a last choice from these justices, the FTC’s been submitting further proof to help its claims that the merger would damage competitors in gaming and damage clients, together with a letter from earlier this yr after Microsoft laid off almost 2,000 workers throughout the newly acquired groups.
At the moment’s letter (through Video games Fray) tries to make use of Microsoft’s current messy modifications to Recreation Cross to help its case, pointing to the truth that Recreation Cross for Console goes away for brand spanking new and lapsed subscribers and will probably be changed by a costlier “Normal” bundle that doesn’t embody day-one releases like this fall’s Name of Responsibility: Black Ops 6, acquired as a part of the Activision deal. The result’s that solely the Recreation Cross Final subscription, which is now $20 a month, will embody entry to all Recreation Cross video games.
“Microsoft’s value will increase and product degradation—mixed with Microsoft’s diminished investments in output and product high quality through worker layoffs, see FTC’s February 7, 2024, Letter—are the hallmarks of a agency exercising market energy post-merger,” the FTC writes. It additionally factors to an announcement Microsoft made in its filings through the trial final summer season suggesting Recreation Cross wouldn’t get costlier simply because Activision Blizzard’s video games had been added to it.
“Right here, the acquisition would profit shoppers by making [Call of Duty] accessible on Microsoft’s Recreation Cross on the day it’s launched on console (with no value enhance for the service based mostly on the acquisition),” the corporate wrote on the time. That particular quote made the rounds on a number of web sites, and has since seemed to be contradicted by this month’s steep value will increase, although Microsoft may most likely attempt to argue that it wasn’t the acquisition straight that spurred the overhaul however a bigger technique shift round its subscription service enterprise.
“Microsoft’s post-merger actions thus vindicate the congressional design of preliminarily halting mergers to completely consider their probably aggressive results, and judicial skepticism of guarantees inconsistent with a agency’s financial incentives,” the FTC’s letter concludes. It’s not clear when a last choice within the attraction will probably be issued, and it’s exhausting to fathom what the results can be if Microsoft ended up shedding. It might little doubt be even messier and extra complicated than its Recreation Cross overhaul.
