Facebook Must Face Gambit Suit Over Social Game Currency

Facebook Inc. (FB), owner of the world’s most popular social network, must face a lawsuit that accuses the company of breaking antitrust laws in the virtual-currency market.

Kickflip Inc., which does business as Gambit, sued in October 2012, saying Facebook destroyed competition for virtual currency services and payment processing when it began offering services of its own in 2009. Facebook sought to get the suit dismissed, arguing that Kickflip failed to allege an injury. U.S. District Judge Leonard Stark in Wilmington, Delaware, today rejected that request.

“Kickflip has satisfied its burden of alleging an event causing injury to Kickflip, beginning with its 2009 ban from Facebook and culminating in the 2011 payments policy,” Stark wrote in the opinion.

Kickflip accused Facebook of sidelining competitors and “blacklisting” Gambit when it forced developers to switch to its services exclusively in 2009 and 2010. Prior to the change, Gambit was the leading virtual currency and payment-processing provider to software developers that published games on Facebook and other social networks.

Facebook, based in Menlo Park, California, said today that the allegations “are without merit.”

Virtual-currency services allow social-game developers to issue currency to 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.

The case is Kickflip Inc. v. Facebook Inc., 12-01369, 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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