eBay 2003 Annual Report Download - page 44

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attention and resources. We have limited experience in localizing our service to conform to local cultures,
standards and policies. In many countries, we compete with local companies who understand the local
market better than we do. We may not be successful in expanding into particular international markets or
in generating revenues from foreign operations. For example, in 2002 we withdrew from the Japanese
market. Even if we are successful, we expect the costs of operating new sites to exceed our net revenues
for at least 12 months in most countries. As we continue to expand internationally, including through the
expansion of PayPal, we are subject to risks of doing business internationally, including the following:
‚ regulatory requirements, including regulation of auctioneering, professional selling, distance selling,
banking, and money transmitting, that may limit or prevent the oÅering of eBay's and PayPal's
services in some jurisdictions, prevent enforceable agreements between sellers and buyers, prohibit
the listing of certain categories of goods, require special licensure, or limit the transfer of
information between eBay and our aÇliates;
‚ legal uncertainty regarding liability for the listings and other content provided by our users,
including uncertainty as a result of less Internet-friendly legal systems, unique local laws, and lack
of clear precedent or applicable law;
‚ diÇculties in integrating with local payment providers, including banks, credit and debit card
associations and electronic fund transfer systems;
‚ diÅerent employee/employer relationships and the existence of workers' councils and labor unions;
‚ diÇculties in staÇng and managing foreign operations;
‚ longer payment cycles, diÅerent accounting practices, and greater problems in collecting accounts
receivable;
‚ potentially adverse tax consequences, including local taxation of our fees or of transactions on our
websites;
‚ higher telecommunications and Internet service provider costs;
‚ strong local competitors;
‚ diÅerent and more stringent consumer protection, data protection and other laws;
‚ cultural ambivalence towards, or non-acceptance of, online trading;
‚ seasonal reductions in business activity;
‚ expenses associated with localizing our products, including oÅering customers the ability to transact
business in the local currency;
‚ laws and business practices that favor local competitors;
‚ proÑt repatriation restrictions, foreign currency exchange restrictions, and exchange rate Öuctuations;
‚ changes in a speciÑc country's or region's political or economic conditions; and
‚ diÅering intellectual property laws.
Some of these factors may cause our international costs of doing business to exceed our comparable
domestic costs. 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
diÇculties in collecting accounts receivable and risks relating to foreign currency exchange rate
Öuctuations. The impact of currency exchange rate Öuctuations is discussed in more detail under ""We are
exposed to Öuctuations in currency exchange rates,'' below.
We intend to expand PayPal's services internationally. Both eBay and PayPal have limited experience
with the payments business outside of the U.S. In some countries, expansion of PayPal's business may
require a close commercial relationship with one or more local banks. We do not know if these or other
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