eBay 2005 Annual Report Download - page 29

example, while suitable alternatives may be developed in the future, the current IP network does not enable
Skype to identify the geographic origin of the traffic traversing the Internet or to provide detailed calling
information about computer-to-computer communications, either of which may make complying with future
regulatory requirements, such as emergency service requirements, difficult or impossible. If Skype were
subject to regulations that are costly or impossible for it to comply with given its technology, its business would
be adversely affected.
In many countries in which Skype operates or provides VoIP products, the laws that may relate to its
offerings are unclear. We cannot be certain that Skype or its customers are currently in full compliance with
regulatory or other legal requirements in all countries in which Skype is used, that Skype or its customers will
be able to comply with existing or future requirements, or that Skype or its customers will continue in full
compliance with any requirements. Skype's failure or the failure of those with whom Skype transacts business
to comply with these requirements could materially adversely affect our business, financial condition and
results of operations.
New rules and regulations with respect to VoIP are being considered in various countries around the
world. Such new rules and regulations could increase our costs of doing business or prevent us from delivering
our products and offerings over the Internet, which could adversely affect Skype's customer base, and thus its
revenue.
Our businesses depend on continued and unimpeded access to the Internet. Internet service providers may
be able to block, degrade, or charge us or our users additional fees for our offerings.
Our customers rely on access to the Internet to use our products and services. In many cases that access
is provided by companies that compete with at least some of our offerings, including incumbent telephone
companies, cable companies, mobile communications companies, and large Internet service providers. Some
of these providers have stated that they may take measures that could degrade, disrupt, or increase the cost of
customers' use of Skype Ì and possibly our other offerings Ì by restricting or prohibiting the use of their
lines for our offerings, by filtering, blocking or delaying the packets containing the data associated with our
products, or by charging increased fees to us or our users for use of their lines to provide our offerings. These
activities are technically feasible and may be permitted in the U.S. after recent regulatory changes, including
recent decisions by the U.S. Supreme Court and Federal Communications Commission. In addition, Internet
service providers could attempt to charge us each time our customers use our offerings, or could charge us for
delivery of email to our customers. Worldwide, a number of companies have announced plans to take such
actions or are selling products designed to facilitate such actions. Interference with our offerings or higher
charges for access to our offerings, whether paid by us or by our customers, could cause us to lose existing
customers, impair our ability to attract new customers, and harm our revenue and growth.
New and existing regulations could harm our business.
We are subject to the same foreign and domestic laws as other companies conducting business on and off
the Internet. Today, there are still relatively few laws specifically 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 all levels of government around the world and it is possible that such laws and regulations
will be adopted. 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. It is not clear how existing laws governing issues such as property ownership,
copyrights and other intellectual property issues, taxation, libel and defamation, obscenity, and personal
privacy apply to online businesses. The vast majority of these laws were adopted prior to the advent of the
Internet and related technologies and, as a result, do not contemplate or address the unique issues of the
Internet and related technologies. Those laws that do reference the Internet, such as the U.S. Digital
Millennium Copyright Act and the European Union's Directive on Distance Selling and Electronic
Commerce have begun to be interpreted by the courts and implemented by the EU Member States, but their
applicability and scope remain somewhat uncertain. As our activities and the types of goods listed on our
website expand, regulatory agencies or courts may claim or hold that we or our users are either subject to
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