Citing Zidane’s infamous headbutt to the chest of Italian defender Marco Materazzi during the World Cup final in Berlin, the FIFA chief said that an investigation into the incident had been launched by the governing body.
"It's not FIFA that decides who wins this award but an international committee of journalists," Blatter told La Repubblica newspaper.
"All the same, the FIFA executive committee has the responsibility of intervening when it is a matter of conduct which goes against the ethics of the sport.
"That is why I gave the orders to our disciplinary commission to investigate what happened."
It has been claimed that Zidane, who was born in Marseilles to Algerian parents, reacted to goading and insults from Inter Milan player Materazzi resulting in the Frenchman’s astonishing headbutt and his consequent sending off.
Expert lip readers who have studied video of the incident presume Materazzi called Zidane "The son of a terrorist whore", and then added: "So just f*** off".
Materazzi, who came into the Italian starting line up due to an injury to first choice central defender Alessandro Nesta, has denied calling the Zidane a terrorist, saying he didn't even know what the word meant.
Blatter added that the actions of the 34 year old French captain had disappointed him both on a personal level and for bringing the game into disrepute.
"I've known Zidane for several years, his tremendous personality, the way he lives his life, his modesty and his love of his family.
"To see him acting like that leaves me vexed, both for himself and for all sense of fair-play."