Global Gaming Factory X, the software maker and Internet cafe operator that allegedly plans to acquire The Pirate Bay, said three weeks ago that it was close to inking a deal with one of the four major record companies. During the past five days, however, numerous music industry insiders have told CNET News that there's no truth to that claim.
At a press conference Thursday in Stockholm, Global Gaming announced that stockholders--which amounted to one plus company CEO Hans Pandeya--met and agreed to go ahead with the acquisition of the BitTorrent search engine. Much has been written about the decision, but a sale of The Pirate Bay is nowhere near to being done.
That's due in part to the ongoing investigation into possibly inaccurate statements made by Stockholm-based Global Gaming and Pandeya. AktieTorget, a Swedish stock market, has halted trading in Global Gaming's shares and officials told CNET that they won't resume until they get the answers they want.
For file-sharing fans, who love The Pirate Bay, the Sweden deal matters because it might give some indication of what will become of the site. Pandeya has said he would charge users for access to authorized film and music files.
Here are some of the Global Gaming statements that investigators are reviewing:
In July, Global Gaming issued a press release that the funding to acquire The Pirate Bay was in place. Now, Pandeya says that the group of 30 investors originally part of the plan have backed out because of all the media scrutiny and the alleged smear campaign leveled at the company. Still, he hasn't turned over to AktieTorget the names of those alleged former investors.
Three weeks ago, Global Gaming announced it had received a bid from unnamed Russian investors to buy The Pirate Bay once the BitTorrent search engine was acquired, but investigators at the stock exchange where Global Gaming's shares trade said the company has yet to provide proof that it received such a bid. The same situations exists with a Global Gaming announcement that it had received a $10 million offer from John Fanning, co-founder of Napster, via Wayne Rosso the former president of Grokster. Rosso was hired by Global Gaming to land licensing deals with music and film companies but walked out after only three weeks.
On August 5, Global Gaming said it was close to reaching an agreement with one of the four major record labels, which include Universal Music Group, Sony Music Entertainment, Warner Music Group, and EMI. The sources I spoke with said some of the labels have had "early stage" discussions but not one of the recording companies has moved into what could be described as advanced talks.
"We almost have a contract ready with one of them," Pandeya told The Local, an English language newspaper based in Sweden on August 5.
Most of the statements came days after the departure of Rosso. He said he left over concerns about Pandeya's character. So, just as the press began to eye Global Gaming with skepticism, Pandeya suddenly came up with funding, a potential record deal and buyers.
What matters most about Pandeya's statements and Global Gaming's press releases is that they might have misled investors and influenced the market. Sweden's Economic Crimes Bureau has confirmed that it is investigating an unusual and unexplained rise in Global Gaming's stock that occured a week before the company announced it would buy The Pirate Bay.
Where is all this going?
You got me. I have to believe that if this were happening in the U.S., some state attorney general would have gone after Pandeya by now. The Swedes seem willing to let this play out in the press. That's fine, everybody seems to be having a good time.
At Thursday's press conference to announce Global Gaming's decision to go ahead with the deal, one of the reporters asked Pandeya if the new group of anonymous investors included any real people.