Facebook has been accused of engaging in
“anticompetitive and unfair business practices” in the virtual
goods market by Consumer Watchdog.
In a letter to the Federal Trade Commission
(FTC), Consumer Watchdog has demanded an investigation into
Facebook’s seemingly anticompetitive conduct following revised
Facebook terms that are considered to violate Sections 1 and 2 of
the Sherman Act and Section 5 of the FTC Act.
Revised Facebook terms, which come into effect
1 July, require game developers using the Facebook platform must
exclusively utilise Facebook Credits – the social networking site’s
virtual currency – in the operations of their games. Such
developers must also agree not to charge lower prices to consumers
outside of Facebook and must pay a 30% service fee for all Facebook
Facebook has reportedly entered into a joint
venture with social game developer Zynga and, according to Consumer
Watchdog, has apparently made it exempt from the application of the
“By prohibiting game developers from offering
lower prices to users outside the Facebook platform, Facebook has
fixed prices and therefore stifled competition outside the Facebook
platform because developers cannot provide the incentive of a
discounted price on another social network or website that would
draw players away from Facebook,” said Consumer Watchdog in its
letter to the FTC.
It is estimated that Facebook controls over
50% of the virtual goods market offered in social gaming.
Therefore, Consumers Watchdog argues Facebook exercises a monopoly
power and revised terms of its Facebook Credit will enable it to
maintain and extend this monopoly.