Consumer Unity and Trust Society (CUTS) International, a non-governmental organization (NGO), has filed a complaint with the Competition Commission of India (CCI) against Facebook’s newly introduced payment system Facebook Credits, which was launched in India in July 2011. The Indian market is big for Facebook with 33.158 million users.
The allegation of CUTS is that 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.
Facebook Credits offer new contractual arrangements through which game developers using the Facebook platform must exclusively utilise only Facebook Credits in the operation of their games. They must also 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. . Social game developers generate revenue when users purchase virtual goods and in game currency during game play on social networks.
CUTS says Facebook Credits is likely to affect the market for virtual goods sold in social games market which is expected to grow rapidly within the next five years and therefore it has filed a preliminary information report (PIR) with the CCI urging it to investigate the potential anti-competitive conduct of Facebook.