Friday, November 30, 2012

Facebook Inc (NASDAQ:FB), Zynga Inc (NASDAQ:ZNGA) lessen dependence on each other

It was a split that was waiting to happen. Facebook Inc (NASDAQ:FB) and its one-time Zynga Inc (NASDAQ:ZNGA) said on Thursday that the companies would no longer be required to give each other exclusive status or display their ads on each other's sites.

Zynga shares slid nearly 13 percent after the companies made their respective disclosures via regulatory filings.

According to the filing made by Zynga, it will no longer have to display Facebook ads or use Facebook payments on its own properties including its website.

Zynga also will no longer have to be required to use Facebook as the exclusive social site for its games, or to grant Facebook exclusive games. It may be recalled that Zynga had blamed Facebook for its poor financial performance earlier this year, citing changes in the social network's platform which made it hard for users to find its games.

Facebook on its part also filed a similar disclosure in a regulatory filing and said that it will also be able to develop its own games after the end of March.

However Facebook was quick to make it clear that it did not intend to compete with Zynga.

 "We're not in the business of building games and we have no plans to do so," Facebook said. "We're focused on being the platform where games and apps are built."

The two companies will still be working with each other but the exclusivity in the arrangement will no longer be there. Zynga will be like any other vendor for Facebook, while the social network site will function like any other client for Zynga.

In the 2010 the two companies had entered into a contract that gave Zynga special status among Facebook game developers.

Zynga shares fell 33 cents, or 12.6 percent, to $2.29 in after-hours trading. The stock closed up 11 cents, or 4.4 percent, at $2.62 in the regular session.

Facebook shares dipped 4 cents to $27.28 in extended trading.

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