eBay 2011 Annual Report Download - page 17

Risk Factors That May Affect Results of Operations and Financial Condition
Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial
condition, results of operations, cash flows, as well as the trading price of our common stock.
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 risks described elsewhere
in this section and the following:
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Item 1A:
RISK FACTORS
• general economic conditions, including the possibility of a prolonged period of limited economic growth or possible economic decline
in the U.S. and Europe; adverse effects of the ongoing sovereign debt crisis in Europe, including its expected negative impact on
European economic growth versus the rest of the world; disruptions to the credit and financial markets in Europe, the U.S., and
elsewhere; 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; intermediated payments in Germany; changes to our dispute resolution process; upgrades to eBay checkout services,
including the introduction of a new eBay shopping cart/basket that enables buyers to add items from multiple sellers and pay in a single
checkout; and recent changes to our fee structure, including the calculation of final value fees based on the total amount of the
transaction (including shipping);
•
our ability to improve the quality of the user experience on our websites and through mobile devices (including our customer support in
the event of a problem) in light of the improved quality generally of the user experience offered by competitive merchants;
• 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 on such confidence;
•
our ability to manage the costs of and effectively implement our user protection programs;
•
our ability to comply with existing and new laws and regulations, especially those that impact our Payments business, as we expand the
range and geographical scope of our services and as we grow larger, including those laws and regulations discussed below under the
caption "If our Payments business is found to be subject to or in violation of any laws or regulations, including those governing money
transmission, electronic funds transfers, money laundering, counter-terrorist financing, sanctions, banking and lending, it could be
subject to liability, licensure and regulatory approval and may be forced to change its business practices";
• new laws or regulations (such as the proposed Stop Online Piracy Act (SOPA) and PROTECT IP Act (PIPA) laws in the U.S.) and
interpretations of existing laws or regulations, including national court interpretations of the European Court of Justice's decision in the
L'Oreal case (see “Item 3: Legal Proceedings” below), that impose liability on us for the actions of our users or otherwise harm our
business models, especially as we become more actively involved in transactions on our platforms;
• 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);
• the impact on PayPal or Bill Me Later of regulations enacted pursuant to new laws regulating financial institutions, including the
Dodd-Frank Wall Street Reform and Consumer Protection Act in the U.S.;
•
our ability to manage the costs of compliance with existing and new laws and regulations that affect our businesses;
•
the volume, velocity, size, timing, monetization, and completion rates of transactions using our websites or technology;
•
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;
•
our ability to develop product enhancements, programs, and features on different platforms (e.g., mobile devices, and the availability of
PayPal at the retail point of sale) at a reasonable cost and in a timely manner;
•
changes to our use of advertising on our sites;
• our ability to upgrade and develop our systems (including the migration to GSI's new technology platform), infrastructure and
customer service capabilities to accommodate growth and to improve the functionality and reliability of our websites and services at a
reasonable cost while maintaining 24/7 operations;
•
the actions of our competitors, including the introduction of new sites, services, products and functionality;