Are Google and Zynga Working on a Gaming Deal?

Google (s goog) has invested $100 million or more in game developer Zynga — the company behind popular Facebook games such as FarmVille and Mafia Wars — and is planning a new offering called Google Games, according to a widely circulated report by TechCrunch. Some have speculated that the company could make this gaming platform part of a Facebook-style social network called Google Me that is also said to be under development at the web giant.

Neither Google nor Zynga have confirmed that they are working together, but what looked to me like some potential corroborating evidence appeared on Sunday in the form of a message posted to Twitter by Allan Leinwand, a former partner at venture fund Panorama Capital who is now chief engineer at Zynga (and is also an occasional columnist for GigaOM). In the message, Leinwand said that in his short time at the company — he joined two months ago — Zynga had already done several major business development deals, and he specifically mentioned one with Google. Until the recent rumors, there had been no reports of the two companies working together (Leinwand declined to comment when contacted via email, as did a Zynga spokesperson, and the tweet has since been deleted).

Although the TechCrunch report of a deal with Zynga is new, there have been repeated signs that Google is venturing into social gaming: in April, the web giant acquired a company called Labpixies, which makes several popular social games that can be embedded in Google’s customized iGoogle home page. The search giant also hired gaming veteran Mark DeLoura earlier this year for a newly created position called “game developer advocate.” Based on an analysis of what it calls “downstream traffic” from Google, the web measurement firm Hitwise recently predicted that gaming would be one of the most likely markets for a Google investment.

Zynga, which owns several of the most popular social games on Facebook, has signed a number of development deals recently, including one with Yahoo that will see the company’s games appear on a range of Yahoo-branded sites. These deals have been interpreted by some as a sign that Zynga is looking to decrease its reliance on Facebook, although the two companies recently agreed to work closely together following rumors of a rift between them. If Google’s plans to build a social network similar to Facebook are to be believed, having a social gaming element seems like a natural move for the web giant, and Zynga — whose market value has been estimated to be as high as $5 billion — is by far the leader in that market.

If the reports are true, however, it’s interesting that Google would choose to pursue Zynga rather than trying to develop a relationship with a game developer that isn’t so closely tied to Facebook, one of the company’s biggest competitors in the social-networking space.

Related content from GigaOM Pro (sub req’d): How the Next Zynga Could Reinvent Social Gaming