eBay 2010 Annual Report Download - page 40

• challenges associated with maintaining relationships with local law enforcement and related agencies;
and
• differing intellectual property laws.
Some of these factors may cause our international costs of doing business to exceed our comparable domestic
costs. As we expand our international operations and have additional portions of our international revenues
denominated in foreign currencies, we also could become subject to increased difficulties in collecting accounts
receivable and repatriating money without adverse tax consequences, and increased risks relating to foreign
currency exchange rate fluctuations. The impact of currency exchange rate fluctuations is discussed in more detail
under the caption “We are exposed to fluctuations in currency exchange rates and interest rates” above.
In addition, we conduct certain functions, including product development, customer support and other
operations, in regions outside the U.S., particularly in India and China. We are subject to both U.S. and local
laws and regulations applicable to our offshore activities, and any factors which reduce the anticipated benefits,
including cost efficiencies and productivity improvements, associated with providing these functions outside of
the U.S. could adversely affect our business.
We maintain a portion of Shopping.com’s research and development facilities and personnel in Israel, and
in 2008 we acquired Fraud Sciences Ltd., an Israeli company. Political, economic and military conditions in
Israel affect those operations. The future of peace efforts between Israel and its neighboring countries remains
uncertain. Increased hostilities or terrorism within Israel or armed hostilities between Israel and neighboring
countries or other entities could make it more difficult for us to continue our operations in Israel, which could
increase our costs. In addition, many of our employees in Israel could be required to serve in the military for
extended periods of time under emergency circumstances. Our Israeli operations could be disrupted by the
absence of employees due to military service, which could adversely affect our business.
Acquisitions, joint ventures and strategic investments could result in operating difficulties, dilution, and other
harmful consequences.
We have acquired a number of businesses in the past, including, most recently, Milo.com in the United
States and brands4friends, an online shopping club in Germany. The acquisitions of Milo.com and
brands4friends expose us to new risks associated with these adjacent businesses, including risks related to
merchants continuing their relationships with Milo.com or brands4friends on acceptable terms, if at all, and risks
related to the unavailability of safe harbor liability protection as a “hosting provider” under European Union law
for the brands4friends business.
We expect to continue to evaluate and consider a wide array of potential strategic transactions, including
business combinations, acquisitions and dispositions of businesses, technologies, services, products and other
assets, as well as strategic investments and joint ventures. At any given time we may be engaged in discussions
or negotiations with respect to one or more of these types of transactions. Any of these transactions could be
material to our financial condition and results of operations.
The process of integrating any acquired business may create unforeseen operating difficulties and
expenditures and is itself risky. The areas where we may face difficulties include:
• diversion of management time, as well as a shift of focus from operating the businesses to issues
related to integration and administration, particularly given the number, size and varying scope of our
recent acquisitions;
• declining employee morale and retention issues resulting from changes in, or acceleration of,
compensation, or changes in management, reporting relationships, future prospects, or the direction of
the business;
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