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Do Facebook Credits abuse monopoly power?

July 30, 2011

I’ve written a decent amount about Facebook APIs and payments over the last few months, including a recent article on Facebook Credits as part of my Alternative Payment Systems series for X.com.

A quick recap:  Facebook Credits is a virtual and online currency used within the Facebook application platform.  Facebook’s Credits API is similar to the PayPal X Platform’s Express Checkout, but currently only works for Facebook-based applications.  Facebook takes a whopping 30% cut of each purchase made using credits, and yet as of 1 July 2011, Facebook began requiring Facebook platform game developers to use Facebook Credits exclusively for payments and purchases.

This last point about the required use of Credits and its 30% fee should give developers pause.  In fact, it’s a major point in a recent complaint brought by Consumer Watchdog against Facebook to the U.S. Federal Trade Commission (FTC).  Click here to read the full complaint.

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In effect, Consumer Watchdog is claiming that Facebook is abusing its power in pricing transactions on its Facebook Platform.  Their claims go beyond just gaming transactions, since they note that Facebook could easily apply the same policy to the purchase of other things such as movies, music, and “other real goods“.  This claim may be presumptuous, or it may just be common sense; time will tell.

Click to read the complete post on the PayPal X Developer Network including more about Consumer Watchdog’s other, Zynga related claim and some links for further reading.

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