Travelzoo 2007 Annual Report Download - page 40

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Competition
We face intense competition. We compete for advertising dollars with large Internet portal sites, such as
America Online, MSN and Yahoo!, that offer listings or other advertising opportunities for travel companies. We
compete with search engines like Google and Yahoo! Search that offer pay-per-click listings. We also compete with
travel meta-search engines and online travel deal publishers. We also compete with large online travel agencies like
Expedia and Priceline that also offer advertising placements. In addition, we compete with newspapers, magazines
and other traditional media companies that operate Web sites which provide advertising opportunities. We expect to
face additional competition as other established and emerging companies, including print media companies, enter
our market. We believe that the primary competitive factors are price and performance.
Many of our current and potential competitors have longer operating histories, significantly greater financial,
technical, marketing and other resources and larger client bases than we do. In addition, current and potential
competitors may make strategic acquisitions or establish cooperative relationships to expand their businesses or to
offer more comprehensive solutions.
New technologies could increase the competitive pressures that we face. The development of competing
technologies by market participants or the emergence of new industry standards may adversely affect our
competitive position. Competition could result in reduced margins on our services, loss of market share or less
use of our products by travel companies and consumers. If we are not able to compete effectively with current or
future competitors as a result of these and other factors, our business could be materially adversely affected.
Government Regulation and Legal Uncertainties
There are increasing numbers of laws and regulations pertaining to the Internet, including laws and regulations
relating to user privacy, liability for information retrieved from or transmitted over the Internet, online content
regulation, user privacy and domain name registration. Moreover, the applicability to the Internet of existing laws
governing issues such as intellectual property ownership and infringement, copyright, patent, trademark, trade
secret, obscenity, libel and personal privacy is uncertain and developing.
Privacy Concerns. Government agencies are considering adopting regulations regarding the collection and
use of personal identifying information obtained from individuals when using Internet sites or e-mail services.
While we have implemented and intend to implement additional programs designed to enhance the protection of the
privacy of our users, these programs may not conform to any regulations which may be adopted by these agencies.
In addition, these regulatory and enforcement efforts may adversely affect our ability to collect demographic and
personal information from users, which could have an adverse effect on our ability to provide advertisers with
demographic information. The European Union (the “EU”) has adopted a directive that imposes restrictions on the
collection and use of personal data. The directive could impose restrictions that are more stringent than current
Internet privacy standards in the U.S. The directive may adversely affect our operations in Europe.
Anti-Spam Legislation. In December 2003, the CAN-SPAM Act of 2003, a federal anti-spam law, was
enacted. This law pre-empts various state anti-spam laws and establishes a single standard for e-mail marketing and
customer communications. We believe that this law will, on an overall basis, benefit our business as we do not use
spam techniques or practices and may benefit now that others are prohibited from doing so.
Domain Names. Domain names are the user’s Internet “addresses.” The current system for registering,
allocating and managing domain names has been the subject of litigation and of proposed regulatory reform. We
own the domain names for travelzoo.com, travelzoo.ca, travelzoo.co.jp, travelzoo.com.au, travelzoo.com.tw,
travelzoo.co.uk, travelzoo.de, travelzoo.fr, travelzoo.org, travelzoo.net, weekend.com, and weekends.com, and
have registered “Travelzoo” as a trademark in both the United States and in the EU. Because of these protections, it
is unlikely, yet possible, that third parties may bring claims for infringement against us for the use of our domain
name and trademark. In the event such claims are successful, we could lose the ability to use our domain names.
There can be no assurance that our domain names will not lose their value, or that we will not have to obtain entirely
new domain names in addition to or in lieu of our current domain names if changes in overall Internet domain name
rules result in a restructuring in the current system of using domain names which include “.com,” “.net,” “.gov,”
“.edu” and other extensions.
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