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Consumer Unity & Trust Society (CUTS) has asked the Competition Commission of India to investigate the “potential anti-competitive conduct” of Facebook arising out of `Facebook Credits'.
Facebook Credits is a virtual currency that enables gamers to purchase in-game items on the Facebook platform.
New arrangements
“Under the new contractual arrangements, game developers using the Facebook platform must exclusively utilise ‘Facebook Credits' in the operation of their games; must agree not to charge lower prices to consumers outside of Facebook, and must pay a 30 per cent service fee for all Facebook Credit purchases,” CUTS said in a statement.
It further pointed out that India was a big market for Facebook (at the last count, it had 25 million users here) and hence any dominant practice would “adversely affect Indian consumers also”.
CUTS, in its Preliminary Information Report to the competition watchdog, said, “Facebook Credits was likely to affect the market for virtual goods sold in social games – a market that is expected to grow rapidly within the next five years, concomitant with the explosive growth of social networking.”
What is social gaming?
Social gaming refers to game applications played within social networks such as Facebook. Social game developers generate revenue when users purchase virtual goods and in-game currency during game play (to buy, say, exotic crops in a farm game).
Traditionally, users could directly transact with game developers to buy virtual goods (by using credit cards) or opt for a third party payment site Paypal. Facebook now requires social game developers on its platform to process payments through the Facebook Credits system.
However, market watchers pointed out that the move would not have a significant impact in the Indian context. “The number of India-focused game developers riding on Facebook platform is still small, and hence it is not as if a serious business is threatened,” said an industry expert. He also pointed out that unlike certain other countries, in India social gaming was not the top activity for Facebook users.
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