Facebook Sued by Gambit Over Market for Game Currency

Facebook Inc. (FB) was sued by Kickflip Inc., which does business as Gambit, over claims the social- networking company broke antitrust laws in the virtual-currency market.

Gambit was the leading virtual currency and payment- processing provider to software developers that published games on Facebook and other social networks. Facebook’s decision in 2009 to offer its own services to developers destroyed a “vibrant and competitive market,” lawyers for Kickflip said in court papers made public today in federal court in Wilmington, Delaware.

“Facebook leveraged its dominance in the social-game marketplace to control and dominate the separate market for virtual-currency services,” Kickflip lawyers said. “As the result of Facebook’s actions, Gambit’s business was destroyed.”

Virtual-currency services allow social-game developers to issue currency to game players in exchange for direct payment or participation in third-party advertising offers. By mid-2009 at least 20 virtual-currency service providers were available to social-game developers, according to the complaint.

Facebook’s service charged developers a 30 percent fee and provided only a narrow range of services, Kickflip said in its complaint. Facebook forced its competitors to the sidelines by “blacklisting” Gambit and forcing developers to switch to its services exclusively in 2009 and 2010.

Kickflip, based in Austin, Texas, is asking a judge to bar Facebook from enforcing its policy and award unspecified damages, according to the complaint.

The complaint “is without merit,” Andrew Noyes, a spokesman for Menlo Park, California-based Facebook, said in an e-mailed statement. The company plans to defend the claims, Noyes said.

The case is Kickflip Inc. v. Facebook Inc., U.S. District Court, District of Delaware (Wilmington).

To contact the reporter on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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