Zynga Inc (NASDAQ:ZNGA)’s stock price tanked by nearly 13 percent in after-hours trading to $2.29 per share, after the online gaming company amended its agreement with Facebook Inc (NASDAQ:FB). Shares of Zynga are down 6.40% in today’s trading session.

Zynga Facebook

Based on its Form-8K filing with the Securities and Exchange Commission, Zynga will is no longer obliged to display Facebook ads or use the social networking giants’ payment system on any of its own game sites.

The online gaming company is no longer required to use Facebook Inc (NASDAQ:FB) as exclusive platform for its games, and it gives the social network giant exclusive rights on certain game titles.

Effective as of March 31, 2013, Zynga’s use of the social networking giant’s platform and data on any services it offers through its own game site (Zynga.com) will be governed by Facebook’s standard terms of service.

In addition, Zynga Inc (NASDAQ:ZNGA)’s right to use e-mail addresses obtained from Facebook Inc (NASDAQ:FB) or to cross promote games will be limited by the standard terms of service of the social network giant.

Furthermore, any new game acquired or developed by Zynga Inc (NASDAQ:ZNGA) and launched on its website or any third party website must also be available on Facebook, unless it is another party owns or operates the game, or if there are technical limitations.

Zynga Inc (NASDAQ:ZNGA) and Facebook signed an agreement in 2010. The changes stripped Zynga’s edge from other game developers using Facebook’s platform.

Meanwhile, Facebook Inc (NASDAQ:FB) issued a statement citing that it has no plans to compete with Zynga. “We’re not in the business of building games, and we have no plans to do so. We’re focused on being the platform where games and apps are built,” according to the social network giant.

Wedbush Securities analyst Michael Pachter believes that Facebook will not develop its own games. According to Pachter, the changes in the agreement mean Zynga Inc (NASDAQ:ZNGA) is governed by the same standards and terms enjoyed by other game developers using Facebook’s platform.

In addition, Pachter said, “I read this as Facebook Inc (NASDAQ:FB) showing mercy, looking at Zynga and saying they were a good partner and are not doing well right now.”

On the other hand, Colin Sebastian, an analyst at Robert W. Baird opined that Zynga’s games will remain on Facebook platform. He said the games “are not going to disappear from Facebook. They just may have to spend a little more on advertising to gain the same exposure. On the other hand, it probably frees Zynga Inc (NASDAQ:ZNGA) to focus more on their shift to mobile.”

Jordan Rohan, an analyst at Stifel Nicholas, sums up the news as follows:

Zynga changed how it relates to its largest distribution partner. The upside comes from greater independence for Zynga, which is now subject to the same (less restrictive) terms of service as all other game publishers on the Facebook platform. Further, Zynga may launch new games on other social networks as long as those games are also launched on Facebook soon thereafter.On the negative side, it opens the door to increased competition some day, even if not immediately, from Facebook or any publishers that might fall under Facebook’s control through another business combination. Finally, the agreement also mentions Zynga’s real money gambling initiatives, a source of investor optimism for Zynga, which has seen its business on the Facebook platform shrink over the last few quarters. We remain on the sidelines until stability is reached for Zynga fundamentals.