Former Federal Trade Commission Chair Lina Khan has renewed her criticism of Microsoft’s acquisition of Activision Blizzard, pointing to recent Xbox Game Pass price increases and layoffs as proof of the deal’s negative consequences. Her comments came in response to a post on social media highlighting contradictions between Microsoft’s courtroom statements and its current business strategy.
In March 2023, Microsoft assured a court that “Game Pass prices will not increase as a result of the [Microsoft-Activision] Merger.” However, Lee Hepner, a senior legal counsel, resurfaced the pledge this week, noting that only months later, a federal judge rejected the FTC’s challenge to the acquisition. Hepner emphasized that the judge’s son was employed by Microsoft at the time, further fueling debate about the ruling.
Echoing the concerns, Khan stated, “Microsoft’s acquisition of Activision has been followed by significant price hikes and layoffs, harming both gamers and developers. As we’ve seen across sectors, increasing market consolidation and increasing prices often go hand-in-hand. As dominant firms become too-big-to-care, they can make things worse for their customers without having to worry about the consequences.”
Her criticism follows recent reporting from Bloomberg that shed light on the financial trade-offs of the Game Pass model. According to the outlet, Microsoft’s decision to include Call of Duty on Game Pass cost the company more than $300 million in lost Xbox and PC sales last year. The estimate was provided by a former employee, who explained that while the subscription service generates user growth, it cannibalizes traditional sales of blockbuster games once sold at premium prices.
Despite these issues, Microsoft has maintained that Game Pass is profitable. The service generated nearly $5 billion in revenue for the fiscal year ending in June, marking a new record for the platform. On October 1, Xbox announced a tiered pricing structure, offering subscriptions at $10 for a smaller library of 50 games, $15 for 200 games, and $30 for more than 400 titles, including 75 day-one releases such as Call of Duty: Black Ops 7 and The Outer Worlds 2.
As Khan’s remarks highlight, skepticism remains over the broader industry effects of consolidation. While Xbox continues to emphasize Game Pass as the cornerstone of its gaming strategy, the debate over whether the model benefits developers and players—or simply strengthens platform control—appears far from resolved.
