Incredimail 2014 Annual Report Download - page 24

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 of products, 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, European data
protection rules may apply to companies which are not established in the European Union. The anticipated Data Protection Regulation (expected
to be adopted in 2015) will likely have an even larger territorial scope. Further, it will include stringent operational requirements for companies
that process personal data and will contain significant penalties for non-
compliance. Also in other relevant subject matters such as cyber security,
e-
commerce, copyright and cookies, new European initiatives have been announced by the European regulators. To further complicate matters in
Europe, member States have some flexibility when implementing European Directives, which can lead to diverging national rules. 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, data collection and protection, libel,
marketing, data security and taxation, apply to the Internet and our business.
Due to rapid changes in technology and the inconsistent interpretations of privacy and data protection laws, we may be required to
materially change the way we do business. For example, we may be required to implement physical, administrative and technological security
measures different from those we have now, such as different data access controls or encryption technology. In addition, we use cloud based
computing, which is not without substantial risk, particularly at a time when businesses of almost every kind are finding themselves subject to an
ever expanding range of state and federal data security and privacy laws, document retention requirements, and other standards of accountability.
Compliance with such existing and proposed laws and regulations can be costly and can delay, or impede the development of new products,
result in negative publicity, increase our operating costs, require significant management time and attention and subject us to inquiries or
investigations, claims or other remedies, including fines or demands that we modify or cease existing business practices.
For more information regarding government regulations to which we are subject, see "Item 4.B Business Overview —
Government
Regulation" for additional discussion of applicable regulations affecting our business.
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