Consumer Watchdog Asks FTC to Stop Facebook Virtual Currency

Social gaming, and the market in virtual goods they support is serious business. According to some estimates, sales of virtual goods may be as large as $2.1 billion in 2011. Facebook has recently announced a requirement that Social gaming developers such as Zynga, famous for its “Farmville” game among others, that use the Facebook platform must exclusively use Facebook Credits in the operation of their games.

With over 500 million users worldwide, and a substantial portion of them in the United States, Facebook may well control over 50% of the market for virtual goods offered in social gaming. Scheduled to take effect on Friday, July 1, 2011, in addition tot the exclusivity requirement, the Facebook Credits terms mandate that developers agree not to charge lower prices to consumers outside of Facebook and pay a 30% service fee for all Facebook Credits purchases.

Critics see the risks as two-fold. First, combining its dominance as the leading platform for social gaming with control of virtual commerce may stifle innovation and competition. Second, 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.

In a complaint, the nonprofit, nonpartisan public interest group Citizen Watchdog asks the FTC to issue an injunction that would stop the anticompetitive behavior.

Read the complaint here:

David M. Adler, Esq. is an attorney, author, educator and entrepreneur with a multidisciplinary practice focused on Intellectual Property, Media & Entertainment Law, Ecommerce, Information Technology and Software development, implementation and licensing. Mr. Adler provides legal counsel all aspects of media and intellectual property law, including trademark and copyright clearance, registration and enforcement, digital and new media licensing, production, finance, regulations, litigation and corporate-commercial transactions. Mr. Adler assists interactive and digital marketing and advertising companies, content providers and licensors with advice on affiliate, publisher and partnership agreements, digital content licensing, syndication, distribution, Social Media and many other related deals.