Google 2011 Annual Report Download - page 40

attorneys general in investigations they are conducting with respect to our business and its impact on competition.
Legislators and regulators, including those conducting investigations in the U.S. and Europe, may make legal and
regulatory changes, or interpret and apply existing laws, in ways that make our products and services less useful to
our users, require us to incur substantial costs, expose us to unanticipated civil or criminal liability, or cause us to
change our business practices. These changes or increased costs could negatively impact our business and results
of operations in material ways.
We are involved in legal proceedings that may result in adverse outcomes.
We are regularly subject to claims, suits, government investigations, and other proceedings involving
competition and antitrust (such as the pending investigations by the FTC and the EC), intellectual property,
privacy, tax, labor and employment, commercial disputes, content generated by our users, goods and services
offered by advertisers or publishers using our platforms, and other matters. Such claims, suits, government
investigations, and proceedings are inherently uncertain and their results cannot be predicted with certainty.
Regardless of the outcome, such legal proceedings can have an adverse impact on us because of legal costs,
diversion of management resources, and other factors. Determining reserves for our pending litigation is a
complex, fact-intensive process that requires significant judgment. It is possible that a resolution of one or more
such proceedings could result in substantial fines and penalties that could adversely affect our business,
consolidated financial position, results of operations, or cash flows in a particular period. These proceedings could
also result in criminal sanctions, consent decrees, or orders preventing us from offering certain features,
functionalities, products, or services, requiring a change in our business practices, or requiring development of
non-infringing products or technologies, which could also adversely affect our business and results of operations.
Our business depends on a strong brand, and failing to maintain and enhance our brand would hurt
our ability to expand our base of users, advertisers, Google Network Members, and other partners.
The brand identity that we have developed has significantly contributed to the success of our business.
Maintaining and enhancing the “Google” brand is critical to expanding our base of users, advertisers, Google
Network Members, and other partners. We believe that the importance of brand recognition will increase due to the
relatively low barriers to entry in the internet market. Our brand may be negatively impacted by a number of
factors, including data privacy and security issues, service outages, and product malfunctions. If we fail to maintain
and enhance the “Google” brand, or if we incur excessive expenses in this effort, our business, operating results,
and financial condition will be materially and adversely affected. Maintaining and enhancing our brand will depend
largely on our ability to be a technology leader and continue to provide high-quality products and services, which
we may not do successfully.
Acquisitions and investments could result in operating difficulties, dilution, and other harmful
consequences that may adversely impact our business and results of operations.
Acquisitions are an important element of our overall corporate strategy and use of capital, and we expect our
current pace of acquisitions to continue. These transactions could be material to our financial condition and results
of operations. We also expect to continue to evaluate and enter into discussions regarding a wide array of potential
strategic transactions. The process of integrating an acquired company, business, or technology has created, and
will continue to create, unforeseen operating difficulties and expenditures. The areas where we face risks include:
• Diversion of management time and focus from operating our business to acquisition integration
challenges.
• Implementation or remediation of controls, procedures, and policies at the acquired company.
• Integration of the acquired company’s accounting, human resource, and other administrative systems,
and coordination of product, engineering, and sales and marketing functions.
• Transition of operations, users, and customers onto our existing platforms.
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