Tuesday, October 30, 2012

Gambit Sues Facebook Inc (NASDAQ:FB) Over Game Currency Market

Latest news reports reveal that Kickflip Inc has sued Facebook Inc (NASDAQ:FB). Kickflip does business as Gambit. It claims that the social networking company has violated antitrust laws in the virtual currency market.

Gambit was the leading virtual currency and payment processing provider to software developers that publishes game son Facebook and other social networking sites. Facebook took a decision in 2009 to offer its own services to developers. However, the decision destroyed a competitive market, as per lawyers of Kickflip.

The lawyers said that the social networking giant has leveraged its monopoly in the social gaming industry to control and rule the separate market for virtual currency services, as a result of which Gambit’s business was destroyed.

Virtual currency services let social game developers to issue currency to players in exchange for direct payment in third part advertising offers. By mid 2009, minimum 20 virtual currency service providers were available to social game developers, as per the complaint.

Facebook’s service charged developers a 30% fee and offered only a few services, as Kickflip mentioned in its complaint. Facebook had compelled its competitors to the sidelines by blacklisting Gambit and compelling developers to switch to its services in 2009 and 2010.

Based in Austin, Texas, Kickflip is appealing to judge to bar Facebook from implementing its policy and granting unspecified damages, as per the complaint.

A spokesman for California-based Facebook, Andrew Noyes said in an emailed statement that the complaint is without merit. Noyes said that Facebook has plans of defending the claims.

The concept of Facebook credits was first identified in 2008 when the social network changed the monetary units for its gifts to ‘credits’. Throughout 2009 and 2010, the company rolled out a method for the developers to work credits into their apps on platform of the social networking site. 

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