Bing Gordon: The Zynga/Facebook Credits Battle Was The Cuban Missile Crisis Of Tech

Today at TechCrunch Disrupt, gaming industry vet and KPCB partner Bing Gordon took the stage with our own Michael Arrington for a special fireside chat that covered a broad range of topics, including Gordon’s investment strategy and ngmoco, which was his first exit as a Partner. And the conversation got particularly interesting when it steered toward a company that’s very near to Gordon’s heart: Zynga.

Gordon, who aside from leading KPCB investments in Zynga is also a major fan (he’s reached the top level in CityVille), recounted some of the drama that went on last spring, when the gaming company came very close to breaking away from Facebook entirely over a dispute involving Facebook’s Credits system. In fact, when Arrington suggested that it was a sort of Cuban Missile Crisis of tech, Gordon agreed.

The dispute revolved around Facebook Credits, Facebook’s own online currency that game developers must use. Credits have an upside — they give users a consistent experience for purchasing virtual goods — but developers have to hand over a 30% cut. And Zynga, which was already raking in money hand over fist, obviously didn’t want to do that.

This led to some intense arguments both inside Zynga and between the gaming company and Facebook. Gordon recounted one night when “something happened… a server went down… and the rockets [from Facebook] were on the radar”. “There was a finger on the red button”. Gordon didn’t explicitly say what that red button actually was, but it was likely Zynga’s off-Facebook portal called Zynga Live, which didn’t rely on the social network nearly as much.

Obviously that red button never got pushed. “It would have been exciting, but it would have been a disaster for both sides” Gordon said. The two sides resolved their issues, with Zynga agreeing to a five year partnership during which it would use Facebook Credits.