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Facebook Credits Unfair to Developers?

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    NEWSLETTERS

    A consumer interest group has filed a complaint with the U.S. Federal Trade Commission calling Facebook's new policy requiring developers to only use its virtual currency and give Facebook a 30 percent share of revenue is unfair and anti-competitive.

    Consumer Watchdog contacted FTC Secretary Donald Clark with the 28-page complaint and said that "Facebook is imposing unfair conditions on developers hoping to deploy games on the popular social network, which often involve exchanges of virtual currency," according to MarketWatch. Facebook announced in January that beginning July 1, all game developers on the social network must process payments through Facebook Credits.

    That means that aside from requiring Facebook Credits and giving Facebook a hefty 30 percent slice of their profits, developers also must avoid offering lower prices for virtual goods on sites other than Facebook. Consumer Watchdog calls that anticompetitive.

    “Antitrust laws protect users against unfair methods of competition and unfair practices that reduce competition, discourage innovation, limit consumer choices and increase prices,” the group wrote in its complaint. “That is precisely what will result if Facebook is permitted to enforce its new Facebook Credits terms.”

    Others have already agreed. “It’s a digital shakedown,” Jeff Chester, executive director of the Center For Digital Democracy, told the Washington Post (Chester also raised concerns with the FTC.) He said Facebook is “using its powerful control of ... a closed system that arguably rivals Google in power across the world to force everyone to use only its digital currency.”

    A spokesman for Consumer Watchdog also suggested that the FTC look into the partnership between Facebook and Zynga, the site's biggest and most profitable social gaming developer, to examine issues of price-fixing -- meaning that Zynga could be getting a better deal than the social network's other developers.

    Apple got heat for taking a 30 percent cut from its iTunes store, but requiring virtual currency is a step beyond simple greed, it's about control. Facebook is flexing serious muscle by treating its developers like serfs who they believe will gleefully hand over 30 percent of revenue to their Facebook overlords. But social gaming developers have few options, so at least for now, Facebook may be able to set the terms -- no matter how unfair.