The non-governmental organisation Consumer Unity and Trust Society (CUTS) International has filed a preliminary information report (PIR) with the Competition Commission of India (CCI) urging the agency to investigate the potential anti-competitive conduct of social networking website Facebook.
The CUTS has complained about Facebook’s newly introduced payment system ‘Facebook Credits,’ which could be spent across various games or applications on the website. “Facebook can potentially engage in anti-competitive and unfair business practices in the market for virtual goods purchased in social games through its ‘Facebook Credit’ terms in India and therefore its activities in this regard need to be investigated by the CCI,” CUTS International said in a statement.
Facebook launched ‘Facebook Credits’ in India last month. 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.
The CUTS has said: “Facebook Credits is 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.” Social gaming is a term used to describe game applications played within such social networks. Social game developers generate revenue when users purchase virtual goods and in game currency during game play. “Facebook is the largest social network service provider in the world and has become such in India as well in the last two years with 33.158 million users as of July 2010. The Indian market is big for Facebook and reportedly it is the second largest market. Hence the impact of their dominant practices will adversely affect Indian consumers also,” it said.