Zynga in Hot Water with San Francisco City Attorney Over ‘Mafia Wars’ Marketing
The San Francisco City Attorney's office is going after social-gaming company Zynga — maker of such popular Facebook applications as FarmVille and Mafia Wars — for what it calls an “illegal and actionable” …
Context & Ripple Effects
Zynga entered August 2010 with legal exposure already on its mind: in May it was reported to be gunning up and lawyering up for a confrontation with Facebook, its dominant distribution channel, over plans for a Zynga Live gaming destination. Now the San Francisco City Attorney's office has called the company's flagship Mafia Wars marketing "illegal and actionable," adding a municipal consumer-protection front to a company whose revenue runs through Facebook-hosted apps like Mafia Wars and FarmVille.
First-order effects
- Zynga must respond to the City Attorney's inquiry on Mafia Wars marketing while simultaneously funding the legal buildout it started for the Facebook fight, straining a legal function built for one battle rather than two.
Second-order effects
- Regulatory scrutiny of Zynga's in-app marketing hands Facebook additional leverage in the ongoing platform standoff — the city attorney's action lands just as Zynga's leverage depends on not giving Facebook reasons to tighten terms.
Third-order effects
- If consumer-protection offices start treating social-game promotion as actionable advertising rather than a novelty category, every free-to-play developer distributing through Facebook inherits the same compliance burden, and platforms may codify stricter marketing rules to insulate themselves.
The trend: Social gaming is colliding with traditional consumer-protection enforcement as regulators begin treating Facebook-app marketing under the same rules as conventional advertising.