TripAdvisor 2014 Annual Report Download - page 31

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For example, there is, and will likely continue to be, an increasing number of laws and regulations pertaining to the Internet and
online commerce that may relate to liability for information retrieved from or transmitted over the Internet, online editorial and user-
generated content, user privacy, behavioral targeting and online advertising, taxation, liability for third-party activities and the quality
of products and services. Our current business partner arrangements with third parties, including Facebook, could be negatively
impacted to the extent that more restrictive privacy laws or regulations are enacted, particularly in the United States or European
Union. In addition, enforcement authorities in the United States continue to rely on their authority under existing consumer protection
laws to take action against companies relating to data privacy and security practices. The growth and development of online commerce
may prompt calls for more stringent consumer protection laws and more aggressive enforcement efforts, which may impose additional
burdens on online businesses generally.
We also have been subject, and we will likely be subject in the future, to inquiries from time to time from regulatory bodies
concerning compliance with consumer protection, competition, tax and travel industry-specific laws and regulations. The failure of
our businesses to comply with these laws and regulations could result in fines and/or proceedings against us by governmental agencies
and/or consumers, which if material, could adversely affect our business, financial condition and results of operations. Further, if such
laws and regulations are not enforced equally against other competitors in a particular market, our compliance with such laws may put
us a competitive disadvantage vis-à-vis competitors who do not comply with such requirements.
The promulgation of new laws, rules and regulations, or the new interpretation of existing laws, rules and regulations, in each
case that restrict or otherwise unfavorably impact the ability or manner in which we provide services could require us to change
certain aspects of our business, operations and commercial relationships to ensure compliance, which could decrease demand for
services, reduce revenues, increase costs and/or subject the company to additional liabilities.
Liberty TripAdvisor Holdings, Inc. currently is a controlling shareholder.
Liberty TripAdvisor Holdings, Inc., or LTRIP, effectively controls the outcome of all matters submitted to a vote or for the
consent of our stockholders (other than with respect to the election by the holders of our common stock of 25% of the members of our
Board of Directors and matters as to which Delaware law requires separate class votes). LTRIP’s control of us, as well as the existing
provisions of our organizational documents and Delaware law, may discourage or prevent a change of control of us, which may reduce
the market price of our common stock.
Our effective tax rate is impacted by a number of factors that could have a material impact on our financial results and could
increase the volatility of those results.
Due to the global nature of our business, we are subject to income taxes in the United States and other foreign jurisdictions. In
the event we incur net income in certain jurisdictions but incur losses in other jurisdictions, we generally cannot offset the income
from one jurisdiction with the loss from another, which could increase our effective tax rate. Furthermore, significant judgment is
required to calculate our worldwide provision for income taxes. In the ordinary course of our business there are many transactions and
calculations where the ultimate tax determination is uncertain. By virtue of our previously filed separate company and consolidated
income tax returns with Expedia we are routinely under audit by federal, state and foreign taxing authorities. Although we believe our
tax estimates are reasonable, the final determination of audits could be materially different from our historical income tax provisions
and accruals. The results of an audit could have a material effect on our financial position, results of operations, or cash flows in the
period or periods for which that determination is made.
Additionally, we earn an increasing portion of our income, and accumulate a greater portion of cash flow, in foreign
jurisdictions, which we consider indefinitely reinvested. Any repatriation of funds currently held in foreign jurisdictions may result in
higher effective tax rates and incremental cash tax payments. In addition, there have been proposals to amend U.S. tax laws that would
significantly impact the manner in which U.S. companies are taxed on foreign earnings. Although we cannot predict whether or in
what form any legislation will pass, if enacted, it could have a material adverse impact on our U.S. tax expense and cash flows.
We cannot be sure that our intellectual property is protected from copying or use by others, including potential competitors.
Our websites rely on content, brands and technology, much of which is proprietary. We protect our proprietary content, brands
and technology by relying on a combination of trademarks, copyrights, trade secrets, patents and confidentiality agreements. In
connection with our license agreements with third parties, we seek to control access to, and the use and distribution of, proprietary
technology, content and brands. Even with these precautions, it may be possible for another party to copy or otherwise obtain and use
our proprietary technology, content or brands without authorization or to develop similar technology, content or brands independently.
Effective intellectual property protection may not be available in every jurisdiction in which our services are made available, and
policing unauthorized use of our intellectual property is difficult and expensive. Therefore, in certain jurisdictions, we may be unable
to protect our intellectual property adequately against unauthorized third-party copying or use, which could adversely affect our
business or ability to compete. We cannot be sure that the steps we have taken will prevent misappropriation or infringement our