Zynga 2012 Annual Report Download - page 32

Evolving regulations, industry standards and practices by platform providers concerning data privacy could
prevent us from providing our current games to our players, or require us to modify our games, thereby
harming our business.
The regulatory framework for privacy issues worldwide is currently in flux and is likely to remain so for the
foreseeable future. Practices regarding the collection, use, storage, transmission and security of personal
information by companies operating over the Internet and mobile platforms are under increased public scrutiny,
and civil claims alleging liability for the breach of data privacy have been asserted against us. The U.S.
government, including the Federal Trade Commission, the Department of Commerce and the U.S. Congress are
continuing to review the need for greater regulation for the collection of information concerning consumer
behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices. There is
also increased attention being given to the collection of data from minors. For instance, the Children’s Online
Privacy Protection Act requires companies to obtain parental consent before collecting personal information from
children under the age of 13. In addition, the European Union has proposed reforms to its existing data protection
legal framework, which may result in a greater compliance burden for companies with users in Europe. Various
government and consumer agencies have also called for new regulation and changes in industry practices.
We began operations in 2007 and have grown rapidly. While our administrative systems have developed
rapidly, during our earlier history our practices relating to intellectual property, data privacy and security, and
legal compliance may not have been as robust as they are now, and there may be unasserted claims arising from
this period that we are not able to anticipate. In addition, our business, including our ability to operate and
expand internationally, could be adversely affected if laws or regulations are adopted, interpreted, or
implemented in a manner that is inconsistent with our current business practices and that require changes to these
practices, the design of our website, games, features or our privacy policy. In particular, the success of our
business has been, and we expect will continue to be, driven by our ability to responsibly use the data that our
players share with us. Therefore, our business could be harmed by any significant change to applicable laws,
regulations or industry practices or the requirements of platform providers regarding the use or disclosure of data
our players choose to share with us, age verification, underage players or the manner in which the express or
implied consent of consumers for such use and disclosure is obtained. Such changes may require us to modify
our game features and advertising practices, possibly in a material manner, and may limit our ability to use the
data that our players share with us.
We process, store and use personal information and other data, which subjects us to governmental regulation
and other legal obligations related to privacy, and our actual or perceived failure to comply with such
obligations could harm our business.
We receive, store and process personal information and other player data, and we enable our players to share
their personal information with each other and with third parties, including on the Internet and mobile platforms.
There are numerous federal, state and local laws around the world regarding privacy and the storing, sharing, use,
processing, disclosure and protection of personal information and other player data on the Internet and mobile
platforms, the scope of which are changing, subject to differing interpretations, and may be inconsistent between
countries or conflict with other rules. We generally comply with industry standards and are subject to the terms
of our own privacy policies and privacy-related obligations to third parties (including voluntary third-party
certification bodies such as TRUSTe). We strive to comply with all applicable laws, policies, legal obligations
and certain industry codes of conduct relating to privacy and data protection, to the extent reasonably attainable.
However, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from
one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by
us to comply with our privacy policies, our privacy-related obligations to players or other third parties, or our
privacy-related legal obligations, or any compromise of security that results in the unauthorized release or
transfer of personally identifiable information or other player data, may result in governmental enforcement
actions, litigation or public statements against us by consumer advocacy groups or others and could cause our
players to lose trust in us, which could have an adverse effect on our business. Additionally, if third parties we
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