eBay 2010 Annual Report Download - page 20

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ITEM 1A:
Risk Factors That May Affect Results of Operations and Financial Condition
The risks and uncertainties described below are not the only ones facing us. Other events that we do not
currently anticipate or that we currently deem immaterial also may adversely affect our results of operations and
financial condition.
Our operating results may decline.
Our operating results have varied on a quarterly basis during our operating history. Our operating results
may fluctuate significantly as a result of a variety of factors, many of which are outside our control. Factors that
may affect our operating results include the following:
• general economic conditions, including the possibility of a prolonged period of limited economic
growth in the U.S. and Europe; disruptions to the credit and financial markets in the U.S. and
worldwide; adverse effects of the ongoing financial crisis in Europe; contractions or limited growth in
consumer spending or consumer credit; and adverse economic conditions that may be specific to the
Internet, ecommerce and payments industries;
• our ability to retain an active user base, attract new users, and encourage existing users to list items for
sale, purchase items through our websites, or use our payment services, especially when consumer
spending is weak;
• the primary and secondary effects of previously announced and possible future changes to our pricing,
products and policies, including, among other changes, restrictions or holds on payments made to
sellers or in connection with certain categories of higher-risk transactions; changes to performance
standards and/or rewards for sellers, including taking into account cases filed through the eBay and
PayPal buyer protection programs in evaluating individual seller performance ratings; changes to the
dispute resolution process, including directing eBay buyers to resolve disputes with sellers through
eBay instead of through PayPal; the adoption of a single fixed price format, which includes making
listings previously available under our store inventory format accessible through our search algorithms;
upgrades to eBay checkout services and, effective July 2011, the discontinuation of support for third
party checkout services;
• consumer confidence in the safety and security of transactions using our websites or technology and the
effect of any changes in our practices and policies designed to foster improved confidence;
• our ability to manage the costs of and effectively implement our user protection programs;
• the volume, velocity, size, timing, monetization, and completion rates of transactions using our
websites or technology;
• regulatory and legal actions imposing obligations on our businesses or our users, including the
injunction related to certain cosmetic and perfume brands (see “Item 3—Legal Proceedings” below);
• our ability to improve the quality of the user experience on our websites (including our customer
support in the event of a problem) in light of the improved quality generally of the user experience
offered by competitive Internet merchants;
• our ability to reduce the loss of active buyers and sellers and increase activity of the users of our
Marketplaces business, especially with respect to our top buyers and sellers;
• changes to our use of advertising on our sites, including changes in ad placement;
• the impact on PayPal or Bill Me Later of regulations enacted pursuant to new laws regulating financial
institutions, including the Dodd-Frank Act in the U.S.;
15