Microsoft hits back at the FTC’s “misleading” letter that called Xbox Game Pass Standard a “degraded” service as a result of the Activision Blizzard buyout

The Federal Trade Commission wasn’t all too happy about Microsoft’s recent changes to Xbox Game Pass, arguing that it was a “degraded” service as a result of the company’s massive Activision Blizzard acquisition, just as it had argued in court. Microsoft hasn’t taken he criticism lightly and has now hit back by calling the allegations “misleading.”

Earlier this month, Microsoft announced that it was going to raise prices on Xbox Game Pass Ultimate, while essentially replacing the base console tier with a new Xbox Game Pass Standard version that withholds day-one releases but includes multiplayer for console owners, meaning you’ll now need to upgrade to the more expensive Ultimate tier to get games like Call of Duty: Black Ops 6, Indiana Jones and the Great Circle, and Avowed on launch day. Slightly confusing, right? (It should be noted that PC Game Pass has remained unfazed by the recent tweaks.)

“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 merger the FTC has alleged,” the commission argued in a filing to the US Court of Appeals for the Ninth Circuit. “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,” it adds, referring to the recent shutdowns of the studios behind Hi-Fi Rush and Redfall.

In a recent counter letter sent to the court, via The Verge’s Tom Warren, Microsoft states that the FTC “presents a misleading, extra-record account of the facts and is a continuation of the agency’s attempts to reinvent its case on appeal.” The company tries to defend its new Standard tier by pointing to how it includes “multiplayer functionality” now, something that the defunct console tier didn’t. It also argues that Ultimate’s price hike is justified because the service will apparently “offer more value” with day-one games, as it always has, while making a big show of how Call of Duty has never dropped onto a subscription service “day-and-date.”

“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 Game Pass.”

While Game Pass price hikes spark debate, indie developers rise up to remind us how vital the Xbox subscription can be “to the tune of staggering numbers.”