Zynga 2015 Annual Report Download - page 38

Table of Contents
particularly laws outside the United States. There is a risk that these laws may be interpreted in a manner that is not consistent with our current practices, and could
have an adverse effect on our business. For example, 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. It is also likely that as
our business grows and evolves and our games are played in a greater number of countries, we will become subject to laws and regulations in additional
jurisdictions. 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 ambiguous, still evolving and could be interpreted in ways that could harm our business or expose us to liability. In
addition, there are ongoing academic, political and regulatory discussions in the United States and other jurisdictions regarding whether social casino applications
should be subject to a higher level or different type of regulation than other social game applications and, if so, what this regulation should include. If new casino-
themed regulations are imposed certain of our casino-themed games, including Zynga Poker, Zynga Poker Classic, Hit it Rich! Slots , Wizard of Oz Slots and Black
Diamond Casino, may become subject to the rules and regulations and expose us to civil and criminal penalties if we do not comply. Heightened regulation could
increase the cost of running our casino games, make our games more difficult to access, decrease our user base or otherwise harm our business, bookings or
revenue.
It is difficult to predict how existing laws will be applied to our business and the new laws to which we may become subject. If we are not able to comply
with these laws or regulations or if we become liable under these laws or regulations, we could be directly harmed, and we may be forced to implement new
measures to reduce our 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 marketing of in-app
purchases, labeling of free-to-play games, regulation of currency and banking institutions unclaimed property and money transmission may be interpreted to cover
our games and the virtual currency, goods or payments that we receive. 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. In addition, some concern has been
expressed in Europe, Australia and in certain other jurisdictions that social gaming should be regulated to protect consumers, in particular minors and persons
susceptible to addiction to social games. This concern could lead to the adoption of legislation or regulations that may impose additional burdens upon us, prohibit
the offering of our games to certain users or territories, increase our costs or require changes to our games.
Ourprospectsmaysufferifournetworkisunsuccessful.
We aspire to expand our network to leverage our existing and new games to bring the best social playing experiences to our audience and further broaden to
other games to ultimately create the best experience for play that includes mobile and web players. If our network fails to engage players or attract advertisers, we
may fail to
35