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July 7, 2011updated 04 Apr 2017 4:15pm

Revised Facebook terms ‘not good enough’

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 Watchdogs call for a FTC investigation into Facebooks 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.

By Louise Naughton

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 practices

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