Here's how it works: A user makes an in-app purchase using Facebook's currency, Facebook Credits, and shares it in his or her newsfeed. A friend sees the purchase and can then buy the same item at a discount directly in the newsfeed.
Currently, the feature only works for certain in-game purchases of virtual goods. Developers determine the items and terms of the promotion.
Speaking at the Inside Social Apps Conference in San Francisco Tuesday, Facebook's head of commerce product marketing Deb Liu said that during early tests, more than half of users chose to share their purchases with friends, Forbes reports.
Although Buy With Friends is currently restricted to virtual goods, we can easily envision how this feature could be expanded to include physical goods as well, especially as more and more retailers set up shop on Facebook. The prototype could be Facebook's way to participate in the kinds of group-buying offers recently popularized by the likes of Groupon and LivingSocial.