Mike Isaac

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After Deal Changes With Zynga, Facebook Could Now Make Its Own Games

Could Facebook delve into the game-making business?

According to documents filed with the SEC, it’s possible.

Facebook and gaming giant Zynga revised their long-standing contract agreements on Thursday, freeing up Zynga from a number of restrictions originally agreed upon by the two companies back in 2010. Among the changes, Zynga isn’t obligated to use Facebook Credits for Zynga game pages, and won’t be forced to launch games exclusively on the Facebook platform.

But buried in the legalese another line jumped out at us.

“…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.”

Say what? Up until now, Facebook has expressed no intention to create games of its own. After all, Facebook has long since courted other game-making companies besides Zynga, including Wooga and King.com.

Facebook, of course, is strenuously denying it would ever attempt to start creating games.

“We’re not in the business of building games and we have no plans to do so,” a Facebook spokesperson told me. “We’re focused on being the platform where games and apps are built.”

In fact, part of this extrication from Zynga in today’s contract changes is an attempt to divest the two companies from such dependence on one another. While on the decline, Zynga still makes up a significant portion of Facebook’s payments business revenues.

Now Facebook wants that pot to be spread more evenly across other developers — like the aforementioned Wooga and King — while Zynga needs to move faster from its reliance on Facebook’s ever-so-powerful News Feed and king-making algorithms.

And to follow that thread, Facebook making its own games would surely alienate other game makers building on the Facebook platform. It would be a risky move with the potential to tick off a lot of the very developers Facebook is trying to court.

Update 3:06 pm PT: One possible scenario — In the original Facebook/Zynga agreement, the contract explicitly states, “FB shall not offer or otherwise make available on the Facebook Site or the Facebook Platform any Facebook Game.” Since many of the original provisions between the companies have changed, and Zynga is being treated as any other game maker on the platform, it’s possible the new provisions are just being spelled out explicitly in Zynga’s 8-K filing on Thursday.

So in other words, the lawyers are making it plain: Facebook can build — or not build — whatever it wants.

Still, that added clause may give other game makers pause if Facebook ever decides to change its mind.

Shares of Zynga were trading down nearly 9 percent after hours at $2.39, while shares of Facebook were up a penny at $27.33.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik