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Facebook Tweaks Terms for Using Its Virtual Money After Antitrust Complaint; FTC Action Still Essential, Consumer Watchdog Says

SANTA MONICA, Calif. July 6, 2011

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. Facebook also claims the right to change the Facebook Credits terms at any time.

John M. Simpson

My Space

"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 Federal Trade Commission."

July 4th July 1

The revised rule 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."

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

Laura Antonini

July 1

$2.1 billion $1.6 billion the United States

Even with the rule change, Facebook’s dominance of the market gives it unreasonable power over game developers. The social network will charge game developers a 30% fee when they redeem their Facebook Credits. While the rule blocking competition outside the Facebook platform has been eased, the service fee exacted by Facebook from game developers may make it cost prohibitive for smaller game developers to compete inside the Facebook platform against larger developers.

June 28

Consumer Watchdog warned that Facebook was creating its own online monetary system and could use exclusionary tactics similar to those from social gaming to control prices and exclude competitors from other markets. Facebook is expected to offer streaming media, music, and potentially real-world, non-digital goods for purchase with Facebook Credits as the applications become more diverse on the social network.

June 28

  • Investigate the marketplace for virtual gaming and the use of virtual currency within social gaming platforms;
  • Investigate the development of Facebook Credits and its imposition upon developers;
  • May 2010
  • Enjoin Facebook from requiring social game developers to exclusively utilize Facebook Credits for the purchase of virtual goods within their games;
  • Enjoin Facebook from prohibiting any developer or application provider from offering lower prices on their products outside the Facebook platform; and
  • Enjoin Facebook from requiring any developer or application provider to exclusively utilize Facebook Credits for goods or services sold within the Facebook platform.

Santa Monica, CA Washington, D.C.

SOURCE Consumer Watchdog

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