New deal removes benefits as companies begin to part ways
Zynga will no longer be tied so closely to Facebook as the two companies have forged a new deal that levels the playing field between the social games company and its competitors.
The giant of social games was once the single biggest earner for the world's largest social network, responsible for as much as 12 percent of Facebook's revenue.
Two years ago the pair struck a deal that gave Zynga undisclosed perks when publishing on the platform as a way of repairing what had become a rocky relationship between the companies.
The benefits were most likely a better revenue share, but an SEC filing released today says Zynga's Facebook games will now "be governed solely by Facebook's standard terms and conditions for game developers."
Investors have taken the news as a serious blow, and share prices have fallen 12 percent in after-hours trading.
Zynga isn't just getting the short end of the stick however, as the company is now freed from any obligation to use Facebook's credit system and ad network outside the site.
A clause was also renegotiated that formerly prevented Facebook from launching its own games, but the company tells Reuters it has no plans to enter game development.
The move has merit for both companies, as Zynga is now able to devote more resources to Zynga.com and its mobile initiatives, and Facebook can devote more attention to its new top-earners.