TripAdvisor 2012 Annual Report Download - page 27

competitively by Google, sold to online publishers or given away for free, our business may face increased
competition from companies, including Google, with substantially greater resources, brand recognition and
established market presence. Facebook may also compete with us in new and unknown ways. For example, if
significant numbers of users adopt Facebook’s newly released Graph Search to get travel recommendations,
it could have the effect of reducing traffic and user engagement on TripAdvisor. We could also face competition
from online travel agents that may be in a position to accumulate and develop a comprehensive offering of travel-
related reviews and resources. The barriers to entry for these companies may be limited given their access to
travel-related information and relationships with consumers. If online travel agents were to more aggressively
pursue our market, the number of visitors to our websites may be negatively affected, which would, in turn,
negatively impact our community and ability to collect content and also to reduce our ability to attract
advertisers. Online travel agents are also a meaningful source of revenue for us, so if in competing with us, these
companies decide to reduce or eliminate their business with us, and it could significantly impact our results of
operations and financial condition. Any of these competitors may announce new products, services or
enhancements that attract users.
Many of our competitors have significantly greater financial, technical, marketing and other resources
compared to us as well as large client bases. In addition, we compete with newspapers, magazines and other
traditional media companies that provide offline and online advertising opportunities. We expect to face
additional competition as other established and emerging companies enter the travel advertising market. Certain
of the companies we do business with, including some of our click-based advertising partners, are also our
competitors. The consolidation of our competitors and partners, including Expedia (through its investment in
trivago) and Priceline (through its announced acquisition of Kayak), may affect our relative competitiveness and
our partner relationships. Competition and consolidation could result in higher traffic acquisition costs, reduced
margins on our advertising services, loss of market share, reduced customer traffic to our websites and reduced
advertising by travel companies on our websites. For example, Google (through its launch of Google Hotel
Finder, acquisition of ITA Software, evolution and expansion of Google + Local and preferred top placement of
Places results in Google organic travel search results), Microsoft’s Bing (through its launch of Bing Travel), have
each taken steps to appeal more directly to travel customers, which could lead to diversion of customer traffic to
their own websites or those of a favored partner, or undermine our ability to obtain prominent placement in paid
or unpaid search results at a reasonable cost, or at all. Competition in our industry may result in pricing pressure,
loss of market share or decreased member engagement, any of which could adversely affect our business and
financial performance.
As a distributor and host of Internet content, we face potential liability and expense for legal claims based on
the nature and content of the materials that we distribute or create, or that are accessible via our websites.
As a distributor and host of original content and user-generated content, we face potential liability based on
a variety of theories, including defamation, libel, negligence, copyright or trademark infringement or other legal
theories based on the nature, creation or distribution of this information, and under various laws, including the
Lanham Act, the Copyright Act, the Federal Trade Commission Act, the Digital Millennium Copyright Act,
Section 230 of the Communications Decency Act, and the European Union E-Commerce Directive. We may also
be exposed to similar liability in connection with content that users post to our websites through forums, blogs,
comments, and other social media features. In addition, it is possible that visitors to our websites could make
claims against us for losses incurred in reliance upon information provided via our websites. These claims,
whether brought in the United States or abroad, could divert management time and attention away from our
business and result in significant costs to investigate and defend, regardless of the merit of these claims. If we
become subject to these or similar claims and are not successful in our defense, we may be forced to pay
substantial damages. There is no guarantee that we will avoid future liability and potential expenses for legal
claims based on the content available on our websites. Should the content distributed through our websites
violate the rights of others or otherwise give rise to claims against us, we could be subject to substantial liability,
which could have a negative impact on our business and financial performance.
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