View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Dashboards
  2. Deals
July 1, 2011updated 04 Apr 2017 4:15pm

Facebook accused of anticompetitive practices

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 Facebooks 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.

By Louise Naughton

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 Credit purchases.

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 revised terms.

“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.

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Wednesday.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Electronic Payments International