It's not only ethical, it's dumb not to. It's what businesses have been doing since time immemorial. To watch your competitor improve and not do anything to com

It's not only ethical, it's dumb not to. It's what businesses have been doing since time immemorial. To watch your competitor improve and not do anything to compete is stupid. Ask Yahoo or KMart. From the legal angle you're probably alright. We recently built a game largely based on another game (sort of the way omgpop built blockles, which is really just Tetris) and I've spoken to attorneys about this extensively. Other than crossing certain lines (trade dress, trademark infringement, etc.) you're probably safe. If you're using their art, or their branding, you may have trouble, but they certainly can't claim to have invented AJAX and a better UI. You should seek legal counsel of course if it ever becomes a problem.