Incredimail 2013 Annual Report Download - page 21

In the case of certain of the applications available via our platform, third parties have introduced (and continue to introduce) new or
updated technologies, applications and policies that may interfere with the ability of our publishers or end users to access or utilize these
applications generally or otherwise make publishers or users less likely to use our services (such as through the introduction of features and/or
processes that disproportionately and adversely impact the ability of publishers or end users to access and use these applications relative to those
of competitors). For example, third parties continue to introduce technologies and applications (including new and enhanced web browsers and
operating systems) that may limit or prevent certain types of applications from being installed and/or have features and policies that significantly
lower the likelihood that end users will install the applications generated from the platform, or that previously-
installed applications will remain
in active use. In addition, there are technologies and applications that interfere with the functionality of (or settings changes made by) toolbar
and/or platform applications. For example, there are technologies and applications that interfere with search boxes embedded within our toolbars
and the maintenance of home page and web browser search settings previously selected by end users of the toolbar. These technologies,
applications and policies adversely impact the ability of users to generate search queries through our applications, which in turn adversely
impacts revenues. Technologies have also been introduced that can block the display of advertisements on web pages and that provide users with
the ability to opt out of our advertising products. Our failure to successfully modify our toolbars and related applications in a cost-
effective
manner in response to the introduction and adoption of these new technologies and applications could adversely affect our business, financial
condition and our results of operations.
Our reputation may be adversely impacted by the negative reputation of toolbar businesses generally and other factors.
Our reputation could be negatively impacted by a number of factors, including the negative reputation associated with toolbars (which
are often downloaded, except under Google’s new guidelines, on an opt-
out basis, without the knowledge of the end user), product and service
quality concerns, complaints by publishers or end users or actions brought by them or by governmental or regulatory authorities and related
media coverage and data protection and security breaches. Moreover, the inability to develop and introduce monetization products and services
that resonate with consumers and/or the inability to adapt quickly enough (and/or in a cost effective manner) to evolving changes to the Internet
and related technologies, applications and devices, could adversely impact our reputation, and, in turn, our business, financial condition and our
results of operations.
Our financial performance may be materially adversely affected by information technology, insufficient cyber security and other
business disruptions.
Our business is constantly challenged and may be impacted by disruptions, including information technology attacks or failures.
Cybersecurity attacks, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to
data, and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected
information and corruption of data, and overloading our servers and systems with communications and data. Unidentified groups recently hacked
numerous Internet websites and servers, including our own, for various reasons, political, commercial and other. Given the unpredictability of
the timing, nature and scope of such disruptions, we could potentially be subject to substantial system downtimes, operational delays, other
detrimental impacts on our operations or ability to provide products and services to our customers, the compromising of confidential or
otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and
networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have
a material adverse effect on our cash flows, competitive position, financial condition or results of operations. Although these attacks, while
causing certain difficulties, have not had a material effect on our business, financial condition or results of operations, there can be no assurance
that such incidents will not have a material adverse effect on us in the future.
New laws and regulations applicable to e-
commerce, Internet advertising, privacy and data collection and protection, and uncertainties
regarding the application or interpretation of existing laws and regulations, could harm our business.
Our business is conducted through the Internet and therefore, among other things, we are subject to the laws and regulations that apply
to e-
commerce and online businesses around the world. These laws and regulations are becoming more prevalent in the United States, Europe,
Israel and elsewhere and may impede the growth of the Internet; and consequently our services. These regulations and laws may cover user
privacy, data collection and protection, content, use of “cookies”, access changes, “net neutrality,” pricing, advertising, distribution of “spam”
,
intellectual property, distribution, protection of minors, consumer protection, taxation and online payment services. .
Many areas of the law affecting the Internet remain largely unsettled, even in areas where there has been some legislative action. This
uncertainty can be compounded when services hosted in one jurisdiction are directed at users in another jurisdiction. For instance, the European
Commission is currently considering data protection regulations that may include operational requirements for companies that receive personal
data that are different than those currently in place in the European Union and that may also include significant penalties for non-
compliance. To
further complicate matters in Europe, Member States may not adopt relevant European Directives or may adopt differing laws in their respective
jurisdictions. Similarly, there have been laws and regulations adopted in Israel and throughout the United States that would impose new
obligations in areas such as privacy, in particular protection of personally identifiable information, and liability for copyright infringement by
third parties. Therefore, it is difficult to determine whether and how existing laws, such as those governing intellectual property, privacy and data
collection and protection, libel, marketing, data security and taxation, apply to the Internet and our business.
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