Priceline 2011 Annual Report Download - page 21

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Improved web browsing functionality and the development of thousands of useful applications is driving substantial
traffic and commerce activity to mobile platforms, including mobile devices such as the iPhone and Android-enabled phones,
and tablet devices such as the iPad. In addition, social networking sites and social commerce and flash-sale sites are
experiencing high levels of usage and rapid growth. We believe travel transactions will grow rapidly on mobile platforms and
may gain acceptance on social and flash-sale platforms. If we are unable to develop product offerings and effective distribution
on these platforms, we could lose market share to existing competitors or new entrants.
We rely on the value of the Booking.com, priceline.com, Agoda and rentalcars.com brands, along with others, and the
costs of maintaining and enhancing our brand awareness are increasing.
We believe that maintaining and expanding the Booking.com, priceline.com, Agoda and rentalcars.com brands, along
with our other owned brands, are important aspects of our efforts to attract and expand our user and advertiser base. As our
larger competitors spend increasingly more on advertising, we are required to spend more in order to maintain our brand
recognition. In addition, we have invested considerable money and resources to date on the establishment and maintenance of
the Booking.com, priceline.com, Agoda and rentalcars.com brands, and we will continue to invest resources to advertising,
marketing and other brand building efforts to preserve and enhance consumer awareness of our brands. We may not be able to
successfully maintain or enhance consumer awareness of these brands, and, even if we are successful in our branding efforts,
such efforts may not be cost-effective. If we are unable to maintain or enhance customer awareness of our brands in a cost-
effective manner, our business, results of operations and financial condition would be adversely affected.
Regulatory and legal uncertainties could harm our business.
The services we offer are regulated by regulations (including without limitation laws, ordinances, rules and other
regulations) of national and local governments and regulatory authorities around the world. Our ability to provide our services
is and will continue to be affected by such regulations. The implementation of unfavorable regulations or unfavorable
interpretations of existing regulations by judicial or regulatory bodies could require us to incur significant compliance costs,
cause the development of the affected markets to become impractical and otherwise have a material adverse effect on our
business, results of operations and financial condition.
Compliance with international and U.S. laws and regulations that apply to our international operations increases our
cost of doing business in foreign jurisdictions. These laws and regulations include U.S. laws such as the Foreign Corrupt
Practices Act, the UK Bribery Act and local laws which also prohibit corrupt payments to governmental officials, data privacy
requirements, labor relations laws, tax laws, anti-competition regulations and consumer protection laws. Violations of these
laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, and prohibitions on the
conduct of our business. Any such violations could result in prohibitions on our ability to offer our services in one or more
countries, could delay or prevent potential acquisitions, and could also materially damage our reputation, our brands, our
international expansion efforts, our ability to attract and retain employees, our business and our operating results. Our success
depends, in part, on our ability to anticipate these risks and manage these difficulties. We are also subject to a variety of other
risks and challenges in managing an organization operating in various countries, including those related to:
• general economic conditions in each country or region;
• fluctuations in currency exchange rates and related impacts to our operating results;
• regulatory changes or other government actions;
• political unrest, terrorism and the potential for other hostilities;
• public health risks, particularly in areas in which we have significant operations;
• longer payment cycles and difficulties in collecting accounts receivable;
• additional complexity to comply with regulations in multiple tax jurisdictions, as well as overlapping tax regimes;
• our ability to repatriate funds held by our foreign subsidiaries to the United States at favorable tax rates;
• difficulties in transferring funds from or converting currencies in certain countries; and
• reduced protection for intellectual property rights in some countries.
Our business has grown substantially over the last several years and continues to expand into new geographical
locations. In addition, we have made efforts and expect to make further efforts to integrate supply across our various demand
platforms. These changes add to complexity in tax compliance, and our increased size and operating history may increase the
likelihood that we will be subject to audits by taxing authorities in various jurisdictions.