eBay 2008 Annual Report Download - page 46

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Some of these competitors have longer operating histories, significantly greater financial, technical, mar-
keting, customer service and other resources, greater name recognition, or a larger base of customers in affiliated
businesses than PayPal. PayPal’s competitors may respond to new or emerging technologies and changes in
customer requirements faster and more effectively than PayPal. Some of these competitors may also be subject to
lesser licensing, anti-money laundering, and other regulatory requirements than PayPal, which is subject to
additional regulations based on its licensure as a bank in Luxembourg. They may devote greater resources to the
development, promotion, and sale of products and services than PayPal, and they may offer lower prices. For
example, Google Checkout provided free payment processing through February 1, 2008, and currently offers free
payments processing on transactions in an amount proportionate to certain advertising spending with Google.
Competing services tied to established banks and other financial institutions may offer greater liquidity and
engender greater consumer confidence in the safety and efficacy of their services than PayPal.
Overseas, PayPal faces competition from similar channels and payment methods. In each country, numerous
banks provide standard online credit card acquiring and processing services, and these banks typically have leading
market share. In addition, PayPal faces competition from Visa’s Visa Direct, MasterCard’s MoneySend, Royal Bank
of Scotland’s World Pay and ClickandBuy in the EU, NOCHEX, Moneybookers, NETeller and FirePay in the
United Kingdom, CertaPay and HyperWallet in Canada, Paymate and BPay in Australia, Alipay, YeePay and 99 Bill
in China and Inicis in South Korea. In addition, in certain countries, such as Germany and Australia, electronic
funds transfer is a leading method of payment for both online and offline transactions. As in the U.S., established
banks and other financial institutions that do not currently offer online payments could quickly and easily develop
such a service.
Some of PayPal’s competitors, such as Wells Fargo, First Data, American Express, and Royal Bank of
Scotland, also provide processing or foreign exchange services to PayPal. If PayPal were to seek to expand the
financial products that it offers, either alone or through a commercial alliance or an acquisition, these processing
and foreign exchange relationships could be negatively affected, or these competitors and other processors could
make it more difficult for PayPal to deliver its services.
Skype
The market for Skype’s products is also intensely competitive and characterized by rapid technological
change. We expect Skype’s various communications competitors, including, for example, the providers of online
communications products and telecommunications operators, to continue to improve the performance of their
current products and introduce new products, software, services and technologies. Many telecommunications firms
offer “bundled” services, where a group of services that may include cable or satellite television, internet services
(e.g., cable modem or DSL), and telecommunications are offered for a single monthly price. If Skype’s competitors
successfully introduce new products, offer “bundled” services or enhance their existing products, this could reduce
the market for Skype’s products, increase price competition, or make Skype’s products obsolete, which could lower
Skype’s adoption rates, decrease its ability to attract new users or cause its current users to migrate to a competing
company.
Additionally, several of Skype’s current and potential competitors have longer operating histories, are
substantially larger, and have greater financial, marketing, technical, and other resources. Some also have greater
name recognition and a larger installed base of customers than Skype has.
Our business may be adversely affected by factors that cause our users to spend less time on our websites,
including seasonal factors, national events and increased usage of other websites.
Anything that diverts our users from their customary level of usage of our websites could adversely affect our
business. We would therefore be adversely affected by geopolitical events such as war, the threat of war, or terrorist
activity, and natural disasters, such as hurricanes or earthquakes. Similarly, our results of operations historically
have been seasonal because many of our users reduce their activities on our websites with the onset of good weather
during the summer months, and on and around national holidays. In addition, increased usage of social networking
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