eBay 2013 Annual Report Download - page 26

If our Enterprise business is unable to migrate certain existing clients to its new suite of Commerce Technologies in a timely and cost-
effective manner, it would be substantially harmed.
Our Enterprise business is in the process of migrating certain existing clients to its new suite of Commerce Technologies. This project is
time consuming, could involve additional costs and involves significant technical risk. Previously planned migrations of certain clients to the
new suite of Commerce Technologies have been delayed into 2014 and beyond. If client migrations to the new suite of Commerce Technologies
continue to be delayed, the functionality of the new suite of Commerce Technologies is not accepted by existing Enterprise clients or prospective
clients targeted by our Enterprise business, the new suite of Commerce Technologies contains an unacceptable amount of design flaws or does
not perform or operate as expected, or our Enterprise business fails to meet client commitments and services level agreements, our Enterprise
business could continue to be subject to substantial penalties under its agreements with its clients (including significant financial penalties and
termination rights for its affected clients), its relationships with its clients and their respective businesses could continue to be substantially
harmed, and additional Enterprise clients may seek to terminate their contracts with our Enterprise business early based on actual or proposed
breach. In addition, our Enterprise business' new suite of Commerce Technologies provides for substantially more client control over certain
platform functionality, such as promotions and marketing, operations and performance analytics. If our Enterprise business is unable to help
clients understand, assess and address their internal preparedness needs for the new suite of Commerce Technologies, this could result in delays
in deployment, client dissatisfaction due to lack of preparedness, degraded site performance, and additional support costs attributable to client-
based issues. We believe that our Enterprise business' ability to secure new clients and retain current clients will be negatively impacted if it is
unable to continue to roll out the new suite of Commerce Technologies in live client implementations. Any of these events or circumstances
could materially and adversely affect our Enterprise business. Even if accomplished successfully, this migration project may cost more than
expected or take longer than planned, which could harm our Enterprise business.
We are subject to risks associated with information disseminated through our service.
The laws relating to the liability of online services companies for information carried on or disseminated through their services remain
unsettled in many jurisdictions. Claims could be made against online services companies under both U.S. and foreign law for defamation, libel,
invasion of privacy, negligence, copyright or trademark infringement, or other theories based on the nature and content of the materials
disseminated through their services. Several private lawsuits seeking to impose liability under a number of these theories have been brought
against us, as well as other online service companies. In addition, domestic and foreign legislation has been proposed that would prohibit, or
impose liability for, the transmission over the Internet of certain types of information. Our Marketplaces service features a Feedback Forum,
which includes information from users regarding other users. Although all such feedback is generated by users and not by us, claims of
defamation or other injury have been made in the past and could be made in the future against us for not removing content posted in the
Feedback Forum.
Furthermore, several court decisions arguably have narrowed the scope of the immunity provided to online service providers like us in the
U.S. under the Communications Decency Act. For example, the Ninth Circuit has held that certain immunity provisions under the
Communications Decency Act might not apply to the extent that a website owner materially contributes to the development of unlawful content
on its website. As our websites add or change services, challenges to the applicability of these immunities can be expected to continue. In
addition, the Paris Court of Appeal has ruled in the Louis Vuitton Malletier and Christian Dior Couture cases that applicable laws protecting
passive Internet “hosts” from liability are inapplicable to eBay given that eBay actively promotes bidding on its sellers' listings and receives a
commission on successful transactions, and is therefore a broker. The European Court of Justice decision in the L'Oréal case (see “Item 3: Legal
Proceedings” below) gave broad discretion to national courts in Europe to determine if Internet hosting immunity applies to eBay. Accordingly,
our potential liability to third parties for the user-provided content on our sites, particularly in jurisdictions outside the U.S. where laws
governing Internet transactions are unsettled, may increase. If we become liable for information provided by our users and carried on our service
in any jurisdiction in which we operate, we could be directly harmed and we may be forced to implement new measures to reduce our exposure
to this liability, including expending substantial resources or discontinuing certain service offerings, which would negatively affect our financial
results. The increased attention focused upon liability issues as a result of these lawsuits and legislative proposals could require us to incur
additional costs and harm our reputation and our business.
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