Zynga 2015 Annual Report Download - page 36

Table of Contents
law enforcement matters, tax matters, labor and employment claims, commercial claims, as well as stockholder derivative actions, class action lawsuits, and other
matters. Such claims, suits, government investigations, and proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of
their outcomes, such legal proceedings can have an adverse impact on us because of legal costs, diversion of management and other personnel, and other factors. In
addition, it is possible that a resolution of one or more such proceedings could result in liability, penalties, or sanctions, as well as judgments, consent decrees, or
orders preventing us from offering certain features, functionalities, products, or services, or requiring a change in our business practices, products or technologies,
which could in the future materially and adversely affect our business, operating results, and financial condition. See the section titled “Legal Matters” included in
Note 12—“Commitments and Contingencies” in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Programmingerrorsorflawsinourgamescouldharmourreputationordecreasemarketacceptanceofourgames,whichcouldharmouroperatingresults.*
Our games may contain errors, bugs, flaws or corrupted data, and these defects may only become apparent after their launch, particularly as we launch new
games and rapidly release new features to existing games under tight time constraints. We believe that if our players have a negative experience with our games,
they may be less inclined to continue or resume playing our games or recommend our games to other potential players. Undetected programming errors, game
vulnerabilities that may be exploited by cheating programs and other forms of misappropriation, game defects and data corruption can disrupt our operations,
adversely affect the game experience of our players by allowing players to gain unfair advantage, misappropriate virtual goods, harm our reputation, cause our
players to stop playing our games, divert our resources and delay market acceptance of our games, any of which could result in legal liability to us or harm our
operating results.
Evolvingregulations,industrystandardsandpracticesbyplatformprovidersconcerningdataprivacycouldpreventusfromprovidingour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 violation of data privacy laws have been asserted against us. The U.S. government, including the Federal
Trade Commission, the Department of Commerce, U.S. Congress, and various State Attorneys General 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. While our administrative and technical 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 policies. 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
33