Facebook has not gone far enough in its latest
revision of its “blatant anticompetitive” virtual money terms and a
Federal Trade Commission (FTC) intervention is still necessary
argues Consumer Watchdog.

Shortly after Consumer Watchdog’s call for a
FTC investigation into Facebook’s “anticompetitive and unfair
business practices” regarding its virtual currency Facebook
Credits, the social networking site changed a rule that was accused
of stifling price competition.

The original rule, which came into effect on 1
July, required game developers using the Facebook platform to
exclusively utilise Facebook Credits in the operations of their
games. The revised rule, which came into effect on 3 July, says:
“You may not charge a logged-in Facebook user of your game app on
Facebook a higher price in Credits for an item, virtual currency,
or service than you would charge a logged-in Facebook user on
another platform or service via another payment method.”

Therefore, a developer now can offer price
competition on other platforms so long as the player isn’t logged
into Facebook.

This revision has done nothing to appease the Consumer Watchdog,
however, especially since Facebook’s revised terms still require
developers to use Facebook Credits exclusively to sell virtual
goods in their games and to pay an “exorbitant 30% fee” for
redeeming credits so they can be paid. This service fee may make it
cost prohibitive for smaller game developers to compete inside the
Facebook platform against larger developers.

“Faced with an antitrust complaint, Facebook
tweaked one blatantly anticompetitive provision, but they’ve used
their monopoly position to maintain an onerous burden on developers
that ultimately will mean higher prices for consumers,” said John
M. Simpson, director of Consumer Watchdog’s Privacy Project.

“Facebook tweaked its terms when its worst
policies were highlighted; now there is nothing to stop them from
changing them when the heat’s off. We call on the FTC to formally
block Facebook’s predatory policies.”

The virtual goods market is expected to produce revenue of
$2.1bn in 2011, up from $1.6bn the previous year, according to
Consumer Watchdog.

“Facebook isn’t being run out of a dorm room
anymore,” said Simpson.

“It’s a global, multi-billion dollar corporate
giant that dominates its market and must play by the rules. Its
executives shouldn’t have to be embarrassed into doing the right
thing by the filing of a complaint with the FTC.”


Revised articles:

Facebook accused of anticompetitive