Zynga 2013 Annual Report Download - page 13

Table of Contents
We encourage innovation, the creation of compelling game experiences and moving with a sense of urgency to capitalize on our
opportunities for our success and the benefit of our players. These factors are critical to extending our leadership position as we seek to continue
building successful franchises. We remain steadfast in our commitment to surprise and delight our players. We believe our unique company
culture serves as the foundation of our success. Our core commitments help guide the company and we believe will help us deliver on our
following commitments:
Research and Development
We believe continued investment in enhancing existing games and developing new games, and in software development tools and code
modification, is important to attaining our strategic objectives. Our research and development expenses were $413.0 million, $645.6 million and
$727.0 million in 2013, 2012 and 2011, respectively, which included stock-based expense of $61.9 million, $200.6 million and $374.9,
respectively.
Government Regulation
We are subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet, many
of which are still evolving and could be interpreted in ways that could harm our business. In the United States and internationally, laws relating
to the liability of providers of online services for activities of their users and other third parties are currently being tested by a number of claims,
including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement, and other theories
based on the nature and content of the materials searched, the ads posted, or the content provided by users. Any court ruling or other
governmental action that imposes liability on providers of online services for the activities of their users and other third parties could harm our
business. We are potentially subject to a number of foreign and domestic laws and regulations that affect the offering of certain types of content,
such as that which depicts violence, many of which are ill defined, still evolving and could be interpreted in ways that could harm our business
or expose us to liability.
In addition, rising concern about the use of social networking technologies for illegal conduct, such as the unauthorized dissemination of
national security information, money laundering or supporting terrorist activities may in the future produce legislation or other governmental
action that could require changes to our games or restrict or impose additional costs upon the conduct of our business.
Some of our games or features are based upon traditional casino games, such as poker. We have structured and operate these games and
features, including Zynga Poker , with the gambling laws in mind and believe that these games or features do not constitute gambling.
We also offer our players various types of sweepstakes, giveaways and promotion opportunities. We are subject to laws in a number of
jurisdictions concerning the operation and offering of such activities, many of which are still evolving and could be interpreted in ways that
could harm our business. Any court ruling or other governmental action that imposes liability on providers of online services could result in
criminal or civil liability and could harm our business.
In the area of information security and data protection, many states have passed laws requiring notification to users when there is a security
breach for personal data, such as the 2002 amendment to California’s Information Practices Act, or requiring the adoption of minimum
information security standards that are often
9
•
Grow and sustain proven hits
•
Create new hits
•
Growth on mobile
•
Build our network
•
Drive efficiencies