Throughout most of 2025, Microsoft shifted away from its consumer-friendly image after an inflation price hike. Their Xbox Gaming Division continues to suffer from questionable business practices that are endangering their console sales and studio partners.
The tech company’s latest controversy has consumers accusing retailers of not selling their Xbox Series X and Series S. Game Pass subscriptions have also received criticism due to their doubling in price. Former Federal Trade Commission Chairman Lina Khan, who foresaw Microsoft’s financial losses, shares the reason why the company is crumbling.
Khan Warned About Activision-Blizzard Acquisition
Khan and other members of the Biden Administration attempted to convince Big Tech to observe artificial intelligence tools before integrating them into their workforces in 2023. Companies such as Meta, Google, and Microsoft were already a couple of steps ahead, selling built-in AI tools with their products. The FTC identified that these trained bots could mimic human labor, including generating images and writing.
Due to Big Tech’s rapid adaptation of AI tools, Khan issued this antitrust warning, “We already know that in moments of technological disruption, established players and incumbents may be tempted to crush, absorb, or unlawfully restrain new entrants to remain in dominance.”
The then-FTC chairman explained, “And we already see these risks. A handful of powerful firms today control the necessary raw materials, not only the vast amount of stored data, but also the cloud services and computing power that startups and other businesses rely on to develop and deploy AI products.”
However, Khan and the FTC faced many court losses during the volatile 2024 Election year. Among them was the Activision-Blizzard Acquisition, which allowed Microsoft to control where to sell Call of Duty and the publisher’s popular titles. She stated that the merger would damage the gaming industry’s competitive market and the pricing of gaming subscriptions.
Judge Jacqueline Scott Corely explained why she rejected the FTC’s antitrust authority. “The commission has failed to provide a single document that contradicts Microsoft’s publicly stated commitment to make [Activision-Blizzard games] available on PlayStation and Nintendo Switch.”
Soon, Khan’s warning became reality as Microsoft greatly downsized its workforce within the past year. CNBC calculated that of the 15,000 employees that were terminated, 9,000 of those job cuts came from the Xbox Gaming Division. Many of the partner game studios with successful hits also had their development cut.
Perfect Dark’s reboot title was part of Rare’s (formerly Rareware) comeback lineup. After nearing completion, Microsoft suddenly shut down its first-time developer, The Initiative. According to CEO Satya Nadella, this was necessary to restructure the company with AI-integrated tools. The tech giant continues to lay off staff including 68 positions at their Portugal headquarters.
Sledgehammer Games founder Glen Schofield even disliked what Call of Duty has become under Xbox. He told The Gamer, “Once you’re assimilated by one of these companies, you take on some of their traits. Since I left Sledgehammer, none of the later Call of Duty games have been very good.”
The Tariff War is Causing Inflation Hikes
Khan has been monitoring Microsoft’s recent business practices after resigning from the FTC. The tech company has steadily changed its prices for Xbox consoles and the Game Pass subscriptions since the Trump Administration returned to the White House. After President Donald Trump mandated the AI Action Plan, he began imposing tariffs on key manufacturing countries.
China is Microsoft’s leading Xbox manufacturer and is the president’s top targeted nation. Prices of their metal imports rapidly increased from 10%-125% since Feb. 4th. Almost all of these materials are used to produce technological goods.
The ongoing 2025 trade war continues to affect the cost of consumer goods, including video games. Most developers have decided to offer their games digitally as physical console copies have grown expensive. Nintendo used this strategy to sell the Switch 2 with a download of Mario Kart World. Those who chose the digital bundle spent $79.99 instead of the larger amount retailers would charge.
Meanwhile, Microsoft sold Xbox exclusives through Game Pass for free. They later joined forces with Sony to sell them on PlayStation 5 for those who couldn’t afford a new gaming console. On Sept. 19th, the game publisher announced that the Xbox consoles will have these price updates as of Oct. 3rd:
- Series S (512 GB Storage): $399.99
- Series S (1TB Storage): $499.99
- Series X (Digital Gaming): $599.99
- Series X (Disk Drive): $649.99
- Series X Galaxy Black Special Edition (2 TB Storage): $799.99
Then, the tech giant decided to increase the price for their once-beloved Xbox Game Pass subscriptions for new members. The news did not sit well with gamers after reading the official Microsoft newsletter. The visual images provided describes each plan’s features through vague language.
“Short Wait Times” for Game Pass Ultimate and Premium means the service will provide shorter ads as you play games digitally on Xbox Cloud Gaming. Both Game Pass Essential and Free will run full advertisement breaks. New members will pay 50% more for Ultimate at $29.99 monthly, while current subscribers stay at $14.99 monthly.
YouTuber Jacob Weeby criticized the updated subscription tiers, “Gaming is a different form of entertainment. It’s interactive. And whatever happens in the game depends on the player’s actions. When you introduce ad breaks, it disrupts their experience.”
Retailers Reaction and a Disappointing ROG Xbox Ally
Microsoft continues to falter as the holiday season grows near. On Sept. 12th, consumers noticed that retailers did not have Xbox consoles on display. They instead shelved accessories, like controllers and gaming headsets, and gift cards. The tech giant later investigated and addressed the situation the next day on Windows Central. Xbox alumni Larry “Major Nelson” Hryb reported, “All I know is I went to a couple of Targets and GameStops this week, and I did find the console’s hardware and games for sale.”
The response garnered mixed reception as anonymous employees’ reports continued. According to The Gamer, the mentioned store chains (Walmart, Target, and GameStop) could be following Costco’s sales approach. The Kirkland Signature supermarket informed former IGN journalist Destin Legarie that they will not stock the Xbox Series X and Series S at this time.
With the release of the ROG Xbox Ally, the company justified their business decision by alluding to the hardware’s capabilities and pricing. It’s as strong as a modern PC handling games at 60-120 frames. It can even access your Steam Game Library. Microsoft’s AI, Copilot, is included for players to access the Internet for game guides.
However, some game reviewers have reported that the handheld PC can only reach peak performance if it’s plugged into an outlet. Compared to its predecessor and the Nintendo Switch, the handheld’s weight will give you hand fatigue over time. The ROG Xbox Ally controller design also makes it awkward for travel. Many were surprised that the handheld did not come with a dock station. Instead, it’s a cardboard holder about the size of your hand.
GameSpot’s Tamoor Hussain said that he did not feel it was an upgrade from the original ASUS ROG Ally. “They are effectively the same hardware with Xbox branding,” he told his viewers on YouTube. “The difference between the two is the processors. The Xbox Ally X has an AMD Ryzen AI Z2 Extreme. What it means is a small boost in game performance with very little change.”
The Xbox Ally X is currently selling for $999.99 while the original was priced at $599.99. Khan explained how Microsoft’s ambitions led them to this decision. “[The Activision-Blizzard Acquisition] has harmed 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 worrying about the consequences.”
