eBay 1999 Annual Report Download - page 41

may not be successful in expanding into international markets or in generating revenues from foreign operations.
Even if we are successful, the costs of operating internationally are expected to exceed our international net
revenues for at least 12 months in most countries. As we continue to expand internationally, we are subject to
risks of doing business internationally, including the following:
●regulatory requirements, including regulation of ‘‘auctions,’’ that may limit or prevent the offering of
our services in local jurisdictions;
●legal uncertainty regarding liability for the listings of our users, including less Internet friendly basic
law and unique local laws;
●government-imposed limitations on the public’s access to the Internet;
●difficulties in staffing and managing foreign operations;
●longer payment cycles, different accounting practices and problems in collecting accounts receivable;
●cultural nonacceptance of online trading;
●higher telecommunications and internet service provider costs;
●more stringent consumer protection laws;
●seasonal reductions in business activity; and
●potentially adverse tax consequences.
Some of these factors may cause our international costs to exceed our domestic costs of doing business. To
the extent we expand our international operations and have additional portions of our international revenues
denominated in foreign currencies, we also could become subject to increased difficulties in collecting accounts
receivable and risks relating to foreign currency exchange rate fluctuations.
Our business may be subject to sales and other taxes
We do not collect sales or other similar taxes on goods sold by users through our service. One or more
states may seek to impose sales tax collection obligations on companies such as ours that engage in or facilitate
online commerce. Several proposals have been made at the state and local level that would impose additional
taxes on the sale of goods and services through the Internet. These proposals, if adopted, could substantially
impair the growth of electronic commerce, and could diminish our opportunity to derive financial benefit from
our activities. In 1998, the U.S. federal government enacted legislation prohibiting states or other local authorities
from imposing new taxes on Internet commerce for a period of three years. This tax moratorium will last only
for a limited period and does 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 would 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. The loss of the services of any of our executive officers 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 new businesses are all dependent on attracting
and retaining key employees. The land-based auction businesses are particularly dependent on specialists and
senior management because of the relationships these individuals have established with sellers who consign
property for sale at auction. Dean Kruse is particularly important to Kruse. We have had some turnover of these
types of personnel, and continued losses could result in the loss of significant future business and would harm
us. Such personnel are in great demand by other online companies. In addition, employee turnover frequently
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