Skip to main content

IPO Filing Reveals Extent Of Facebook Control Over Zynga

Zynga in its IPO filing has revealed the relationship it shares with leading social networking giant Facebook Inc, after both entered in to an exclusive agreement last year.

Casual game maker Zynga on Monday filed its IPO with SEC in a 600 page long addendum detailing the relationship it has with various investors especially the Palo Alto, California-based Facebook Inc. Both the companies entered an agreement for five long years in 2010, however, details of the agreement were vague until Monday.

According to Business Insider (opens in new tab), Facebook does not merely share advertisement revenue with its third party game platform Zynga, but it also exercises some rights over its functioning.

Under the signed agreement, Zynga has to inform Facebook at least a week prior to releasing any new game. Also it can not develop games for Facebook’s rival companies such as MySpace and Google Plus.

While the games that are integrated with Facebook are exclusive titles for the social networking website, in return, Zuckerberg’s Facebook will help Zynga meet its target users every month.

The disclosed details have made us believe that Zynga’s relationship with Facebook is not merely based on sharing revenues but direct control exercised over the game developer by Facebook which, according to experts, is not an ideal situation for long term business plans.

Désiré Athow

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website building and web hosting when DHTML and frames were en vogue and started writing about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium. Following an eight-year stint at where he discovered the joys of global tech-fests, Désiré now heads up TechRadar Pro. Previously he was a freelance technology journalist at Incisive Media, Breakthrough Publishing and Vnunet, and Business Magazine. He also launched and hosted the first Tech Radio Show on Radio Plus.