Adobe 2011 Annual Report Download - page 40

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regulations and our reputation among the public body of website visitors depend on such customers' adherence to privacy laws
and regulations and their use of our services in ways consistent with such visitors' expectations. We also rely on representations
made to us by customers that their own use of our services and the information we provide to them via our services do not violate
any applicable privacy laws, rules and regulations or their own privacy policies. We ask customers to represent to us that they
provide their website visitors the opportunity to “opt-out” of the information collection associated with our services, as applicable.
We do not formally audit such customers to confirm compliance with these representations. If these representations are false or
if such customers do not otherwise comply with applicable privacy laws, we could face potentially adverse publicity and possible
legal or other regulatory action. In addition, some countries are considering enacting laws that would expand the scope of privacy-
related obligations required of service providers, such as Adobe, that would require additional compliance expense and increased
liability.
Security vulnerabilities in our products and systems could lead to reduced revenues or to liability claims.
Maintaining the security of computers and computer networks is a critical issue for us and our customers. Hackers may
develop and deploy viruses, worms and other malicious software programs that are designed to attack our products and systems,
including our internal network. Additionally, outside parties may attempt to fraudulently induce our employees or users of our
products to disclose sensitive information in order to gain access to our data or our customers' data. These potential breaches of
our security measures and the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or
sensitive or confidential data about us or our customers, including the potential loss or disclosure of such information or data as
a result of hacking, fraud, trickery or other forms of deception, could expose us, our customers or the individuals affected to a risk
of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise
harm our business.
Although these are industry-wide problems that affect computers and products across all platforms, they affect our products
in particular because hackers tend to focus their efforts on the most popular operating systems and programs and we expect them
to continue to do so. Critical vulnerabilities may be identified in certain of our applications. These vulnerabilities could cause such
applications to crash and could potentially allow an attacker to take control of the affected system. We devote significant resources
to address security vulnerabilities through engineering more secure products, enhancing security and reliability features in our
products and systems, code hardening, deploying security updates to address security vulnerabilities and improving our incident
response time. The cost of these steps could reduce our operating margins. Despite these efforts, actual or perceived security
vulnerabilities in our products and systems may lead to claims against us and harm our reputation, and could lead some customers
to seek to return products, to stop using certain services, to reduce or delay future purchases of products or services, or to use
competing products or services. Customers may also increase their expenditures on security measures designed to protect their
existing computer systems from attack, which could delay adoption of new technologies. Any of these actions by customers could
adversely affect our revenues.
Some of our lines of business rely on us or our third-party service providers to host and deliver services and data, and any
interruptions or delays in these hosted services, security or privacy breaches, or failures in data collection could expose us to
liability and harm our business and reputation.
Some of our lines of business and services, including our online store at adobe.com, our hosted Digital Media offerings
and the Digital Marketing business unit, rely on services hosted and controlled directly by us or by third parties. Because we hold
large amounts of customer data, some of which is hosted in third-party facilities, a security incident may compromise the
confidentiality, integrity or availability of customer data, or customer data may be exposed to unauthorized access. Unauthorized
access to customer data may be obtained through break-ins, breach of our secure network by an unauthorized party, employee
theft or misuse, or other misconduct. It is also possible that unauthorized access to customer data may be obtained through inadequate
use of security controls by customers. While our products and services provide and support strong password controls, IP restriction
and account controls, their use is controlled by the customer. As such, this could allow accounts to be created with weak passwords,
which could result in allowing an attacker to gain access to customer data. Additionally, failure by customers to remove accounts
of their own employees, or granting of accounts by the customer in an uncontrolled manner, may allow for access by former or
unauthorized customer employees. If there were ever an inadvertent disclosure of personal information, or if a third party were
to gain unauthorized access to the personal information we possess on behalf of our customers, our operations could be disrupted,
our reputation could be harmed and we could be subject to claims or other liabilities. In addition, such perceived or actual
unauthorized disclosure of the information we collect or breach of our security could damage our reputation, result in the loss of
customers and harm our business.
Because of the large amount of data that we collect and manage on behalf of our customers, it is possible that hardware or
software failures or errors in our systems (or those of our third party service providers) could result in data loss or corruption or
cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant. Furthermore,
our ability to collect and report data may be delayed or interrupted by a number of factors, including access to the internet, the
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