eBay 2013 Annual Report Download - page 35

New and existing regulations could harm our business.
We are subject to the same foreign and domestic laws as other companies conducting business on and off the Internet. It is not always clear
how existing laws governing issues such as property ownership, copyrights, trademarks and other intellectual property issues, parallel imports
and distribution controls, consumer protection, taxation, libel and defamation, obscenity and personal privacy apply to our businesses. Many of
these laws were adopted prior to the advent of the Internet, mobile and related technologies and, as a result, do not contemplate or address the
unique issues of the Internet and related technologies. Those laws that do reference the Internet, such as the U.S. Digital Millennium Copyright
Act, the U.S. “CAN-SPAM” Act and the European Union's Distance Selling Directive (which will be superseded by the new Consumer Rights
Directive, which the member states are in the process of implementing) and Electronic Commerce Directive are being interpreted by the courts,
but their applicability and scope remain uncertain. As our activities, the types of goods and services listed on our websites and mobile platforms,
the products and services we offer (including through acquisitions such as Bill Me Later and StubHub) and our geographical scope continue to
expand, regulatory agencies or courts may claim or hold that we or our users are subject to additional requirements (including licensure) or
prohibited from conducting our business in their jurisdiction, either generally or with respect to certain actions (e.g., the sale of real estate, event
tickets, cultural goods, boats and automobiles, or the application of distance selling laws). Recent financial and political events may increase the
level of regulatory scrutiny on large companies in general, and financial services companies in particular, and regulatory agencies may view
matters or interpret laws and regulations differently than they have in the past and in a manner adverse to our businesses.
Our success and increased visibility has driven some existing businesses that perceive our business models to be a threat to their businesses
to raise concerns about our business models to policymakers and regulators. These businesses and their trade association groups employ
significant resources in their efforts to shape the legal and regulatory regimes in countries where we have significant operations. They may
employ these resources in an effort to change the legal and regulatory regimes in ways intended to reduce the effectiveness of our businesses and
the ability of users to use our products and services. In particular, these established businesses have raised concerns relating to pricing, parallel
imports, professional seller obligations, selective distribution networks, stolen goods, copyrights, trademarks and other intellectual property
rights and the liability of the provider of an Internet marketplace for the conduct of its users related to those and other issues. Any changes to the
legal or regulatory regimes in a manner that would increase our liability for third-party listings could negatively impact our business.
Over the last few years, some large retailers and their trade associations have sought legislation in a number of states and the U.S.
Congress that would make eBay liable for the sale of stolen property or would ban certain categories of goods from sale on our platform,
including gift cards and health and beauty products. While no such legislation has passed to date, the proponents continue to seek passage of
such legislation, and if any of these laws are adopted they could harm our business.
Numerous states and foreign jurisdictions, including the State of California, where our headquarters are located, have regulations regarding
“auctions” and the handling of property by “secondhand dealers” or “pawnbrokers.”
Several states and some foreign jurisdictions have attempted
to impose such regulations upon us or our users, and others may attempt to do so in the future. Attempted enforcement of these laws against
some of our users appears to be increasing. In France, we were sued by Conseil des Ventes, the French auction regulatory authority, which has
alleged that sales on our French website constitute illegal auctions that cannot be performed without its consent. We won this lawsuit. A lawsuit
alleging similar claims has been brought against us by two associations of French antique dealers, and is now pending on appeal after we won in
the first instance. We intend to vigorously defend against these lawsuits. However, these and other regulatory and licensure claims and
enforcement actions could result in costly litigation and, if unsuccessful, we could be required to change the way we or our users do business in
ways that increase costs or reduce revenues (for example, by forcing us to prohibit listings of certain items or restrict certain listing formats in
some locations). We could also be subject to fines or other penalties, and any of these outcomes could harm our business.
A number of the lawsuits against us relating to trademark issues seek to have our websites subject to unfavorable local laws. For example,
“trademark exhaustion” principles provide trademark owners with certain rights to control the sale of a branded authentic product until it has
been placed on the market by the trademark holder or with the holder's consent. The application of “trademark exhaustion” principles is largely
unsettled in the context of the Internet, and if trademark owners are able to force us to prohibit listings of certain items in one or more locations,
our business could be harmed.
As we expand and localize our international activities, we may become obligated to comply with the laws of the countries or markets in
which we operate. In addition, because our services are accessible worldwide and we facilitate sales of goods and provide services to users
worldwide, one or more jurisdictions may claim that we or our users are required to comply with their laws based on the location of our servers
or one or more of our users, or the location of the product or service being sold or
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