I don't have any deep knowledge of the case, but I think it's worth noting that he apparently built the thing while working at the precursor to SGN, FreeWebs, which has a different business entirely.

It's possible he built it while they were in the process of retooling/spinning off as a gaming company (which would be pretty questionable), but if he built the app in question beforehand, it seems ethical to me (legal or not.)