FTC says Microsoft has turned Xbox Game Pass into a 'degraded product'

The Federal Trace Commission (FTC) had branded Xbox Game Pass a "degraded product" after Microsoft announced a price hike.

Microsoft is increasing the price of Xbox Game Pass Ultimate and Xbox Game Pass for PC subscriptions. It's also introducing a new 'Standard' tier that ditches day-one access for first-party titles.

As spotted by The Verge reporter Tom Warren, the FTC claims that new Standard plan is a "degraded product" that essentially forces consumers to pay more for less.

The U.S. regulator noted these changes come less than a year after Microsoft completed its $68.7 billion merger with Activision Blizzard—a deal the FTC heavily opposed—and claims the two are inherently linked.

"Microsoft is raising the price for its 'Game Pass Ultimate' product from $16.99/month to $19.99/month–a 17 percent year-over-year increase. Additionally, Microsoft is discontinuing its $10.99/month 'Console Game Pass' product. Users of that product must pay 81 percent more to switch to 'Game Pass Ultimate,'" wrote the FTC in a court filing.

FTC claims "consumer harm" from the merger

"For consumers unwilling to pay 81 percent more, Microsoft is introducing a degraded product, 'Game Pass Standard,' at $14.99/month. This product costs 36 percent more than Console Game Pass and withholds day-one releases. Product degradation—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 [Activision Blizzard] merger the FTC has alleged."

The FTC claims Microsoft's recent Game Pass maneuver combined with "reduced investments in output and product quality via employee layoffs" are indicative of a company "exercising market power post-merger."

Those layoffs saw Microsoft make around 1,900 employees redundant earlier this year, impacting workers at subsidiaries like Sledgehammer Games, Blizzard Entertainment, Bethesda France, Infinity Ward, and more.

The console maker has since shuttered multiple ZeniMax studios including Tango Gameworks, Arkane Austin, and Alpha Dog Games. Xbox boss Phil Spencer said the cuts will ensure Microsoft has "enough of the right people" to succeed.