Facebook, Zynga revamp partnership

SAN FRANCISCO Fri Nov 30, 2012 5:08am IST

The corporate logo of Zynga Inc, the social network game development company, is shown at its headquarters in San Francisco, California April 26, 2012. REUTERS/Robert Galbraith/Files

The corporate logo of Zynga Inc, the social network game development company, is shown at its headquarters in San Francisco, California April 26, 2012.

Credit: Reuters/Robert Galbraith/Files

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SAN FRANCISCO (Reuters) - Facebook Inc (FB.O) and Zynga Inc (ZNGA.O) revamped terms of a years-old partnership that was widely viewed as giving Zynga preferential treatment on the world's No.1 online social network, according to regulatory filings from the two companies Thursday.

The agreement is seen as a move by Facebook to level the playing field between Zygna and other game makers the social network is trying to attract.

The new terms give Zynga more flexibility to offer games on its own website, but subjects the maker of Farmville and other popular social games to the same rules as other game makers on the social network.

The two fast-growing social Internet companies, which went public within seven months of each other, have been intimately tied. In recent quarters, fees from Zynga contributed more than 15 percent of Facebook's total revenues.

The revised agreement allows Facebook to develop its own games, according to a filing by Zynga on Wednesday. A person close to Facebook said the company "was not in the business of building games and we have not plans to do so".

Both Internet players have been trying to reduce their inter-dependence, with Zynga starting up its own Zynga.com platform, and Facebook wooing other games developers.

Zynga shares fell 13 percent to $2.26 in after hours trading.

Among the myriad terms of their new agreement, Zynga could elect not to use Facebook's payments mechanism to collect revenue or display Facebook's ads.

"We have streamlined our terms with Zynga so that Zynga.com's use of Facebook Platform is governed by the same policies as the rest of the ecosystem," a spokesman said in a statement. "We will continue to work with Zynga, just as we do with developers of all sizes." (Reporting By Gerry Shih and Alexei Oreskovic; editing by Andrew Hay)

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