Zynga And Facebook Just Ripped Up Their Long-Term Partnership

mark pincus

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Zynga and Facebook have agreed to substantially change an agreement the two companies struck two years ago, a new SEC filing reveals.That agreement gave Zynga a privileged position on Facebook’s platform.

The revision appears to make Zynga more subject to Facebook’s general terms for app developers. Effective in March, Facebook will be free to develop its own games, and won’t have to deliver on certain measures of growth for Zynga.

Zynga also won’t have to use Facebook ad units or Facebook’s payments system on its non-Facebook game websites.

Zynga, whose stock has cratered as its games on Facebook have suffered a drop in usage and monetization, has been trying to get away from its dependence on Facebook and emphasise its mobile games, while Facebook has been quick to point out that other game developers using its platform are doing better than Zynga.

That said, Zynga has had two recent hit sequels in its key Facebook-game franchises, FarmVille and CityVille.

Here’s the text of the filing:

Item 1.01 Entry into a Material Definitive Agreement
On November 28, 2012, Zynga Inc. (“Zynga”), Zynga Game Ireland Limited, Zynga Luxembourg S.àr.L., Facebook, Inc. (“Facebook”) and Facebook Ireland Limited entered into Amendment No. 3 to the Developer Addendum dated May 14, 2010 (“Addendum No. 1”) and Zynga, Zynga Game Ireland Limited, Facebook and Facebook Ireland Limited entered into Amendment No. 3 to the Developer Addendum No. 2 dated December 26, 2010 (“Addendum No. 2”). These amendments to the respective addenda, which supplement and amend Facebook’s standard terms of service for game developers, will apply through May 13, 2015, subject to earlier termination as noted below or in the agreements, as amended.
The material terms of these amendments are summarized below.
1. Amendment No. 3 to Addendum No. 1 (“Addendum No. 1 Amendment”).
Zynga’s use of the Facebook platform and any Facebook data on any Zynga service offered through a Zynga game page (e.g., Zynga.com) will be governed by Facebook’s standard terms of service, effective on March 31, 2013. Zynga will no longer be separately obligated to display Facebook ad units or implement Facebook credits on any such Zynga game pages. In addition, the Addendum No. 1 Amendment provides that Zynga’s right to cross-promote any games that are off of the Facebook web site from Zynga services that use Facebook data and to use e-mail addresses obtained from Facebook, will be limited by Facebook’s standard terms of service, subject to certain exceptions.
2. Amendment No. 3 to Addendum No. 2 (“Addendum No. 2 Amendment”).
The exclusivity provisions of Addendum No. 2 no longer require Zynga, subject to certain exceptions, to use Facebook as the exclusive social platform for the Zynga properties and to grant Facebook certain title exclusivities to Zynga games on the Facebook platform, except as provided below. The following provisions apply:
(a) Facebook’s existing non-discrimination obligations set forth in Addendum No. 2 will continue with respect to Zynga’s games on the Facebook web site.
(b) Any social game launched by Zynga will generally be available through the Facebook web site concurrent with, or shortly following, the time such game is made available on another social platform or a Zynga property. This requirement does not apply to any Zynga mobile games, social games owned and operated by a third party, any social games that cannot be launched on the Facebook web site due to technical limitations, any downloadable social games or any Zynga games launched in China or Japan.
(c) If Facebook allows real money gambling games on the Facebook web site in countries where Zynga has real money gambling games, Zynga will subsequently launch such games on the Facebook web site, if certain conditions are met by Facebook.
(d) If Zynga acquires any social game that was made available on a Zynga property but not on the Facebook web site prior to the acquisition, Zynga will enable and generally make available such game through the Facebook web site after the close of such acquisition.
In addition, effective on March 31, 2013, certain provisions related to web and mobile growth targets and schedules will no longer be applicable and Facebook will no longer be prohibited from developing its own games. Further, Zynga’s right to cross-promote between games on the Facebook web site will be governed by Facebook’s standard terms of service.