Zynga 2011 Annual Report Download - page 23

Table of Contents
exposure to this liability. This may require us to expend substantial resources or to modify our games, which would harm our business, financial
condition and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative
proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability
could harm our business and operating results.
It is possible that a number of laws and regulations may be adopted or construed to apply to us in the United States and elsewhere that
could restrict the online and mobile industries, including player privacy, advertising, taxation, content suitability, copyright, distribution and
antitrust. Furthermore, the growth and development of electronic commerce and virtual goods may prompt calls for more stringent consumer
protection laws that may impose additional burdens on companies such as ours conducting business through the Internet and mobile devices. We
anticipate that scrutiny and regulation of our industry will increase and we will be required to devote legal and other resources to addressing such
regulation. For example, existing laws or new laws regarding the regulation of currency and banking institutions may be interpreted to cover
virtual currency or goods. If that were to occur we may be required to seek licenses, authorizations or approvals from relevant regulators, the
granting of which may be dependent on us meeting certain capital and other requirements and we may be subject to additional regulation and
oversight, all of which could significantly increase our operating costs. Changes in current laws or regulations or the imposition of new laws and
regulations in the United States or elsewhere regarding these activities may lessen the growth of social game services and impair our business.
Companies and governmental agencies may restrict access to Facebook, our website or the Internet generally, which could lead to the loss or
slower growth of our player base.
Our players need to access the Internet and in particular Facebook and our website to play our games. Companies and governmental
agencies, could block access to Facebook, our website or the Internet generally for a number of reasons such as security or confidentiality
concerns or regulatory reasons, or they may adopt policies that prohibit employees from accessing Facebook, our website or other social
platforms. For example, the government of the People’s Republic of China has blocked access to Facebook in China. If companies or
governmental entities block or limit access to Facebook or our website or otherwise adopt policies restricting players from playing our games our
business could be negatively impacted and could lead to the loss or slower growth of our player base.
Our business will suffer if we are unable to successfully integrate acquired companies into our business or otherwise manage the growth
associated with multiple acquisitions.
We have acquired businesses, personnel and technologies in the past and we intend to continue to pursue acquisitions that are
complementary to our existing business and expand our employee base and the breadth of our offerings. Our ability to grow through future
acquisitions will depend on the availability of suitable acquisition and investment candidates at an acceptable cost, our ability to compete
effectively to attract these candidates and the availability of financing to complete larger acquisitions. Since we expect the social game industry
to consolidate in the future, we may face significant competition in executing our growth strategy. Future acquisitions or investments could
result in potential dilutive issuances of equity securities, use of significant cash balances or incurrence of debt, contingent liabilities or
amortization expenses related to goodwill and other intangible assets, any of which could adversely affect our financial condition and results of
operations. The benefits of an acquisition or investment may also take considerable time to develop, and we cannot be certain that any particular
acquisition or investment will produce the intended benefits.
Integration of a new company’s operations, assets and personnel into ours will require significant attention from our management. The
diversion of our management’s attention away from our business and any difficulties encountered in the integration process could harm our
ability to manage our business. Future acquisitions will also expose us to potential risks, including risks associated with any acquired liabilities,
the integration of new operations, technologies and personnel, unforeseen or hidden liabilities and unanticipated, information security
19