So, it was just "announced" that Blizzard and PayPal are now in bed together. (Technically, Markeedragon talked about it back on the 20th, but it's now making the rounds on other news sites.)

They will be walking together hand-in-hand fighting those dangerous virtual gold sellers. Take note, though, that they're targeting gold sellers & merchants, not gold buyers. They have no idea who buys gold except for those (who were caught) within the World of Warcraft.

But, there are two things very interesting with this whole situation:

1. Blizzard and PayPal are calling it an "intellectual properties violation" and that it "infringes upon the intellectual property rights" of Blizzard for the sale of virtual merchandise. We all know, of course, that it's not illegal (for the moment) to buy or sell virtual currency or commodities.

This is more about the wording, though. PayPal isn't saying it's illegal.. "violate" could just as easily have been swapped out with "annoys", "pisses off our partner", or "hurts Blizzard's feelings." But, those just don't sound as intimidating.

2. How did they find out and confirm the PayPal IDs of the gold sellers if they're not publicly advertised?

There was only one way they could do it: registered an account on various gold seller websites, and bought WoW gold from them. =]

So, Blizzard violated their own internal and external policies, the World of Warcraft Terms of Use, Gaming Policies, and even violated their own intellectual property (which is also now PayPal's policy).

A little hypocritical don't you think? Maybe I should change the headline to "Blizzard Buys WoW Gold!". I wonder if Blizzard's PayPal account is going to get banned now.. =]

In order to keep this up too, Blizzard will need to continue buying virtual gold from sellers as well (although right now, they just targeted the biggest suppliers). They can't just tell PayPal to ban certain PayPal IDs (email accounts) that are posted on webpages or forums for example. They'll need to confirm in-game that the person is indeed selling gold (ie, setup a sting operation.) Otherwise, social engineers and troublemakers could just create fake gold seller webpages, post PayPal email addresses, and get them banned.

Anyways.. this might not have as big of an impact that Blizzard is expecting. Gold Merchants have many payment alternatives at their disposal and this was just a bad business decision made on the part of PayPal. Unless, of course, there were other (more invisible) factors at work that "encouraged" PayPal to change their stance on the matter.

This is very good news for PayPal's competitors though. =]

After all, this new process will not impact the market demand for virtual currency.

So, if there are any smart online payment intermediaries out there that compete with PayPal, they should get into communication with these companies immediately. (If you work for a PayPal competitor, talk to management right away as these businesses will be looking for a new service provider and they transact tens-of-millions per year.) =]

This may also open up a new market for independents and smaller sellers. Since BlizzPal is targeting the larger gold sellers, we might see a shift in power or a distribution of power to many sellers.

I'm curious how this will effect gold prices. The big gold sellers might drop prices (a lot) so that they can offload their stocked gold as quickly as possible. Then once the dust settles, gold prices might end up being higher then they've ever been in years (same demand, but more difficult, more risk involved for the sellers, more independents, etc). Should be fun.

* UPDATE:

Apparently, the infringement notices are targeted at gold seller websites (that use PayPal) and not the individual PayPal accounts themselves. So, I guess Blizzard hasn't been confirming anything - but rather just telling PayPal to check their own accounts to see who owns the website and ban them? (Or maybe there's a combination of both.)

What I do know is that there have been multiple waves of these threats from PayPal over the past 2 months and they have mailed big and small sellers alike. Many PayPal accounts have already been banned, while the larger gold sellers are attempting to stall for as long as possible.

Since this has been going on since December, I wonder if it's one of the reasons why gold prices fell so dramatically after the Cataclysm expansion pack..