eBay 1998 Annual Report Download - page 38

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not prohibit states or the Internal Revenue Service from collecting taxes on our income, if any, or from collecting
taxes that are due under existing tax rules. A successful assertion by one or more states or any foreign country that
we should collect sales or other taxes on the exchange of merchandise on our system could harm our business.
We are dependent on key personnel.
Our future performance will be substantially dependent on the continued services of our senior management
and other key personnel. Our future performance also will depend on our ability to retain and motivate our other
officers and key employees. We have only eight executive officers, and the loss of the services of any of them or
other key employees could harm our business. We do not have long-term employment agreements with any of our
key personnel and we do not maintain any “key person” life insurance policies. Our future success also will depend
on our ability to attract, train, retain and motivate other highly skilled technical, managerial, marketing and customer
support personnel. Competition for these personnel is intense, especially for engineers and especially in the San
Francisco/Bay Area, and we may be unable to successfully attract, integrate or retain sufficiently qualified
personnel. In making employment decisions, particularly in the Internet and high-technology industries, job
candidates often consider the value of the stock options they are to receive in connection with their employment. As
a result of the recent appreciation in our stock price, we believe that we may be disadvantaged in competing for
these employees with other companies whose stocks have not similarly appreciated or who have not yet gone public.
Our market is intensely competitive.
The market for person-to-person trading over the Internet is new, rapidly evolving and intensely competitive,
and we expect competition to intensify in the future. Barriers to entry are relatively low, and current and new
competitors can launch new sites at a relatively low cost using commercially available software. We currently or
potentially compete with a number of other companies. Our direct competitors include various online person-to-
person auction services, including Yahoo! Auctions Powered by Onsale and Excite, Inc., both of which are free to
sellers and buyers, Auction Universe and a number of other small services, including those that serve specialty or
regional markets such as CityAuction. We also compete indirectly with business-to-consumer online auction
services such as Onsale, First Auction, Surplus Auction and uBid. A number of traditional auction companies,
including Butterfield & Butterfield and Sotheby’ s, are offering or have announced plans to create Internet auction
sites. We potentially face competition from a number of large online communities and services that have expertise in
developing online commerce and in facilitating online person-to-person interaction. Some of these potential
competitors, including Amazon.com, America Online, Inc. (“AOL”), Lycos, Inc. and Microsoft Corporation,
currently offer business-to-consumer trading services and classified ad services. Some of these companies also may
introduce person-to-person trading to their large user populations. Other large companies with strong brand
recognition and experience in online commerce, such as Cendant Corporation, QVC, USA Network and large
newspaper or media companies, also may seek to compete in the online auction market. The principal competitive
factors in our market include the following:
• volume of transactions and selection of goods;
• community cohesion and interaction;
• system reliability;
• customer service;
• reliability of delivery and payment by users;
• brand recognition;
• website convenience and accessibility;
• level of service fees; and
• quality of search tools.