Facebook and Zynga Contractually "Friend" Each Other

Social network and popular game developer settle differences

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    NEWSLETTERS

    Joi Ito
    One can imagine pictured Zynga CEO Mark Pincus on the phone to Facebook. "Hey, Zuck, dude, this thirty percent vig is really going to hurt. Let's talk."

    Social network Facebook and Zynga, the game development company that became popular through Facebook, have changed their status to being in "a five-year strategic relationship."

    As part of the deal, Zynga will agree to use the new Facebook Credits payment system in popular games like Farmville and Mafia Wars, where Facebook takes a 30 percent share of all sales, cutting directly into Zynga's profit margins.

    It was that detail of Facebook Credits that angered Zynga, which is developing an alternative place to play the company's games called Zynga Live and suggested it might leave Facebook entirely.

    Zynga already pays Facebook an estimated $60 million to $96 million a month in advertising, after a user-interface change aimed at reducing "app clutter" essentially forced game and application developers to buy advertising to attract customers to new offerings.

    So for those looking to make their fortunes leveraging Facebook's network, watch out, it's a moving platform. And just like in Mafia Wars, if you want to do business in the neighborhood, you'll have to deal with the don.

    Photo by Joi Ito.

    Jackson West has never actually played Mafia Wars.