ServiceMagic 2014 Annual Report Download - page 28

Table of Contents
venture or other partners, and to enter into arrangements with these parties on favorable terms and successfully integrate their businesses and
operations with our own.
A variety of new laws, or new interpretations of existing laws, could subject us to claims or otherwise harm our business.
We are subject to a variety of laws in the U.S. and abroad that are costly to comply with, can result in negative publicity and diversion of
management time and effort, and can subject us to claims or other remedies. Some of these laws, such as income, sales, use, value1added and other
tax laws and consumer protection laws, are applicable to businesses generally and others are unique to the various types of businesses in which we
are engaged. Many of these laws were adopted prior to the advent of the Internet and related technologies and, as a result, do not contemplate or
address the unique issues of the Internet and related technologies. Laws that do reference the Internet are being interpreted by the courts, but their
applicability and scope remain uncertain.
For example, through our various businesses we post and link to third party content, including third party advertisements, links and websites.
We also allow users to submit content, such as comments, photographs and videos. We could be subject to liability for posting, hosting or linking to
third party content, and while we generally require third parties to indemnify us for related claims, we may not be able to enforce our
indemnification rights. Some laws, including the Communications Decency Act, or CDA, and the Digital Millennium Copyright Act, or DMCA,
limit our liability for posting or linking to third party content. For example, the DMCA generally protects online service providers from claims of
copyright infringement based on the storage of third party content at the direction of the user, so long as certain statutory requirements are satisfied.
However, the scope and applicability of the DMCA are subject to judicial interpretation and, as such, remain uncertain, and the U.S. Congress may
enact legislation affecting (and potentially limiting) the protections afforded by the DMCA to online service providers. Moreover, similar
protections may not exist in other jurisdictions in which our various businesses operate. As a result, claims have been, and could be, threatened and
filed under both U.S. and foreign laws based upon use of third party content asserting, among other things, negligence, defamation, invasion of
privacy or right or publicity, copyright infringement or trademark infringement.
Also, we send electronic messages to users through our various businesses, as well as develop, market and/or distribute a variety of
downloadable applications through our B2C and B2B operations, which could subject us to liability for failing to comply with laws governing the
sending of electronic messages to our users and the installation of downloadable applications. For example, Canada’s Anti-Spam Legislation
(“CASL”), which became effective on July 1, 2014, prohibits all commercial electronic messages (including e-mail, text, social media, sound and
image messages) that are sent without proper consumer consent. And, effective January 15, 2015, the CASL restricts the unsolicited installation of
computer programs and applications. While several Canadian regulators are jointly empowered to enforce and issue administrative and monetary
penalties for CASL violations, effective July 1, 2017 individuals may also file private and class action lawsuits to collect statutory damages for
CASL violations.
In addition, changing Internet business practices may attract increased legal and regulatory attention. One example of such changing practices
is the increasing use of “native” advertising, a form of advertising in which sponsored content is presented in a manner that some may view as
similar to traditional editorial content. The U.S. Federal Trade Commission has indicated that it will continue to monitor the use of online native
advertising to ensure that it is presented in a manner that is not confusing or deceptive to consumers.
Any failure on our part to comply with applicable laws may subject us to additional liabilities, which could adversely affect our business,
financial condition and results of operations. In addition, if the laws to which we are currently subject are amended or interpreted adversely to our
interests, or if new adverse laws are adopted, our products and services might need to be modified to comply with such laws, which would increase
our costs and could result in decreased demand for our products and services to the extent that we pass on such costs to our customers. Specifically,
in the case of tax laws, positions that we have taken or will take are subject to interpretation by the relevant taxing authorities. While we believe that
the positions we have taken to date comply with applicable law, there can be no assurances that the relevant taxing authorities will not take a
contrary position, and if so, that such positions will not adversely affect us. Any events of this nature could adversely affect our business, financial
condition and results of operations.
We may fail to adequately protect our intellectual property rights or may be accused of infringing the intellectual property rights of third parties.
We regard our intellectual property rights, including trademarks, domain names, trade secrets, patents, copyrights and other similar
intellectual property, as critical to our success. For example, the businesses within certain of our reporting segments (Search & Applications, The
Match Group and eCommerce) rely heavily upon their trademarks (primarily Ask.com,
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