eBay 2003 Annual Report Download - page 61

Problems with third parties who provide services to our users could harm us.
A number of parties provide services to our users that indirectly beneÑt us. Such services include
seller tools that automate and manage listings, merchant tools that manage listings and interface with
inventory management software, and other services. In many cases we have contractual agreements with
these companies that give us a direct Ñnancial interest in their success, while in other cases we have none.
In either circumstance, Ñnancial, regulatory, or other problems that prevent these companies from
providing services to our users could reduce the number of listings on our websites or make completing
transactions on our websites more diÇcult, and thereby harm our business. Any security breach at one of
these companies could also aÅect our customers and harm our business. Although we generally have been
able to renew or extend the terms of contractual arrangements with these third party service providers on
acceptable terms, there can be no assurance that we will continue to be able to do so in the future.
Other companies or governmental agencies may view our behavior as anti-competitive.
Other companies have in the past and may in the future allege that actions taken by us violate the
antitrust or competition laws of the U.S. or other countries, or otherwise constitute unfair competition.
Such claims typically are very expensive to defend, involve negative publicity and diversion of management
time and eÅort and could result in signiÑcant judgments against us, all of which would adversely aÅect us.
We have provided information to the Antitrust Division of the U.S. Department of Justice in
connection with an inquiry into our conduct with respect to ""auction aggregators'' including our licensing
program and a previously settled lawsuit against Bidder's Edge. Although the Antitrust Division has closed
this inquiry, if the Department of Justice or any other antitrust agency were to open other investigations of
our activities, we would likely be harmed by negative publicity, the costs of the action, possible private
antitrust lawsuits, the diversion of management time and eÅort and penalties we might suÅer if we
ultimately were not to prevail.
We depend on the continued growth of online commerce.
The business of selling goods over the Internet, particularly through online trading, is dynamic and
relatively new. Acceptance of and growth in use of the Internet as a medium for consumer commerce may
not continue. Concerns about fraud, privacy, and other problems may discourage additional consumers
from adopting the Internet as a medium of commerce. In particular, our websites require users to make
publicly available personal information that some potential users may be unwilling to provide. These
concerns may increase as additional publicity over privacy issues on eBay or generally over the Internet
increase. Market acceptance for recently introduced services and products over the Internet is highly
uncertain, and there are few proven services and products. In order to expand our user base, we must
appeal to and acquire consumers who historically have used traditional means of commerce to purchase
goods. If these consumers prove to be less active than our earlier users, and we are unable to gain
eÇciencies in our operating costs, including our cost of acquiring new customers, our business could be
adversely impacted.
We depend on key personnel.
Our future performance depends substantially 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 oÇcers and key personnel. The loss of the services of any of our executive oÇcers or other key
employees could harm our business. We do not have long-term employment agreements with any of our
key personnel, we do not maintain any ""key person'' life insurance policies, and our Chief Executive
OÇcer has fully vested the vast majority of her equity incentives. Our new businesses all depend on
attracting and retaining key personnel. Our future success also will depend on our ability to attract, train,
retain and motivate highly skilled technical, managerial, marketing and customer support personnel.
Competition for these personnel is intense, and we may be unable to successfully attract, integrate or
retain suÇciently qualiÑed personnel. In making employment decisions, particularly in the Internet and
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