eBay 2001 Annual Report Download - page 17

On March 24, 2000, our ButterÑelds subsidiary received a grand jury subpoena from the Antitrust
Division of the Department of Justice requesting documents relating to, among other things, changes in
ButterÑelds' seller commissions and buyer premiums and discussions, agreements or understandings with
other auction houses, in each case since 1992. We believe this request may be related to a publicly
reported criminal investigation of auction houses for price Ñxing. We have provided the information
requested in the subpoena. Should these or any other investigations lead to civil or criminal charges against
us, we would likely be harmed by negative publicity, the costs of litigation, the diversion of management
time and other negative eÅects, even if we ultimately prevail. Our business would suÅer if it were not to
prevail in actions like these. Even the process of providing records and information can be expensive, time
consuming and result in the diversion of management attention.
A large number of transactions occur on our websites. We believe that government regulators have
received a substantial number of consumer complaints about us, which, while small as a percentage of our
total transactions, are large in aggregate numbers. As a result, we have from time to time been contacted
by various foreign, federal, state and local regulatory agencies and been told that they have questions with
respect to the adequacy of the steps we take to protect our users from fraud. We are likely to receive
additional inquiries from regulatory agencies in the future, which may lead to action against us. We have
responded to all inquiries from regulatory agencies by describing our current and planned antifraud eÅorts.
If one or more of these agencies is not satisÑed with our response to current or future inquiries, the
resultant investigations and potential Ñnes or other penalties could harm our business.
Starting in 2000, we provided information to the Antitrust Division of the Department of Justice in
connection with an inquiry into our conduct with respect to ""auction aggregators'' including our licensing
program and our recently settled lawsuit against Bidder's Edge. The Division has closed its investigation
without taking action against us.
Privacy Policy
We believe that issues relating to privacy and the use of personal information of Internet users are
becoming increasingly important as the Internet and its commercial uses grow. We have adopted a
detailed privacy policy that outlines how we use information about our users and the extent to which other
registered eBay users may have access to this information. Users must acknowledge and agree to this
policy when registering for the eBay service. We do not sell or rent any personally identiÑable information
about our users to any third-party; however, we do disclose information to sellers and winning bidders that
contains the seller's and winning bidder's name, email address and telephone number. We also disclose
some personally identiÑable information to our subsidiaries and business partners in connection with the
provision of services by these entities. We also will disclose customer information in our possession (other
than credit card information) to a law enforcement agency or member of the eBay's VeriÑed Rights
Owner program that requests this information in connection with a civil, criminal or regulatory
investigation. We also use information about our users for internal purposes in order to improve marketing
and promotional eÅorts, to analyze website usage statistically and to improve content, product oÅerings and
website layout. We are a member of the TRUSTe program, a non-proÑt independent organization that
audits websites' privacy statements and audits their adherence thereto.
New and Existing Regulation of the Internet
eBay is subject to the same federal, state and local laws as other companies conducting business on
the Internet. Today there are relatively few laws speciÑcally directed towards online services. However, due
to the increasing popularity and use of the Internet and online services, many laws relating to the Internet
are being debated at the state and federal levels (both in the U.S. and abroad) and it is possible that laws
and regulations will be adopted with respect to the Internet or online services. These laws and regulations
could cover issues such as user privacy, freedom of expression, pricing, fraud, content and quality of
products and services, taxation, advertising, intellectual property rights and information security.
Applicability to the Internet of existing laws governing issues such as property ownership, copyrights and
other intellectual property issues, taxation, libel, obscenity and personal privacy is uncertain. The vast
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