eBay 2008 Annual Report Download - page 41

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agreement, and either party may commence a lawsuit against the other party beginning in March 2009. Although
Skype is confident of its legal position, as with any litigation, there is the possibility of an adverse result if the matter
is not resolved through negotiation. In such event, continued operation of Skype’s business as currently conducted
would likely not be possible.
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 our
offerings by restricting or prohibiting the use of their lines for our offerings, by filtering, blocking, delaying, or
degrading 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. Some of these providers have contractually restricted their
customers’ access to VoIP offerings (which would include Skype) through their terms of service with their
customers. These activities are technically feasible and may be permitted by applicable law. In addition, Internet
service providers could attempt to charge us each time our customers use our offerings. 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.
Our tickets business is subject to regulatory, competitive, and other risks that could harm this business.
Our tickets business, which includes our StubHub business, is subject to numerous risks. Many jurisdictions
have laws and regulations covering the resale of event tickets, and some jurisdictions prohibit the resale of event
tickets at prices above the face value of the tickets. In addition, new laws and regulations may be passed that would
limit our or our users’ ability to continue this business. Regulatory agencies or courts may claim or hold that we are
responsible for ensuring that our users comply with these laws and regulations or that we or our users are either
subject to licensure or prohibited from reselling event tickets in their jurisdictions.
Some event organizers and professional sports teams have expressed concern about the resale of their event
tickets on our sites. In November 2006, the New England Patriots filed suit against StubHub alleging that StubHub’s
resale activities violate Massachusetts’ ticket resale laws and constitute intentional interference with the team’s
relationship with its season ticket holders. Suits alleging a variety of causes of actions have in the past, and may in
the future, be filed against StubHub by venue owners, competitors, ticket buyers and unsuccessful ticket buyers.
Such litigation could result in damage awards, could require us to change our business practices in ways that may be
harmful to our business, or could otherwise negatively affect our tickets business. Our tickets business is also
subject to seasonal fluctuations and the general economic and business conditions that impact the sporting events
and live entertainment industries. The recent economic downturn has resulted in a decrease in ticket prices sold on
our site and has adversely affected revenue and profits. Our tickets business also faces significant competition from
a number of sources, including ticketing service companies (such as TicketMaster and Tickets.com), event
organizers (such as professional sports teams and leagues), ticket brokers, and other online and offline ticket
resellers, such as TicketsNow (which is owned by TicketMaster) and RazorGator. In addition, ticketing service
companies and event organizers have recently begun to issue event tickets through paperless (electronic) ticketing
systems that include restrictions on the transferability of such event tickets. To the extent that event tickets issued in
this manner cannot be resold on our websites, or to the extent that we are otherwise unable to compete with these
competitors, our tickets business could be harmed.
We depend on key personnel.
Our future performance depends substantially on the continued services of our senior management and other
key personnel and our ability to retain and motivate them. We recently changed our Chief Executive Officer and the
heads of all three of our business units. These changes may result in increased attrition of our personnel as new
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