Enom 2013 Annual Report Download - page 31

Policing unauthorized use of our proprietary rights can be difficult and costly. In addition, it may be necessary to enforce or protect our
intellectual property rights through litigation or to defend litigation brought against us, which could result in substantial costs and diversion of
resources and management attention and could adve rsely affect our business, even if we are successful on the merits.
We rely on technology infrastructure and a failure to update or maintain this technology infrastructure could adversely affect our business.
Significant portions of our content, products and services are dependent on technology infrastructure that was developed over multiple
years. Updating and replacing our technology infrastructure may be challenging to implement and manage, may take time to test and deploy,
may cause us to incur substa ntial costs and may cause us to suffer data loss or delays or interruptions in service. For example, we have suffered
a number of server outages at our data center facilities, which resulted from certain failures that triggered data center wide outages and disrupted
critical technology and infrastructure service capabilities. These events impacted service to some of our significant media properties, including
eHow, as well as our proprietary online content production studio, and eNom customers. As a result of these data center outages, we have
developed initiatives to create automatic backup capacity at an alternate facility for our top revenue generating services to address similar
scenarios in the future. However, there can be no assurance that our efforts to develop sufficient backup and redundant services will be
successful or that we can prevent similar outages in the future. Delays or interruptions in our service may cause our consumers, advertisers,
customers and freelance creative professionals to become dissatisfied with our offerings and could adversely affect our business. Failure to
update our technology infrastructure as new technologies become available may also put us in a weaker position relative to a number of our key
competitors. Competitors with newer technology infrastructure may have greater flexibility and be in a position to respond more quickly than us
to new opportunities, which may impact our competitive position in certain markets and adversely affect our business.
The interruption or failure of our information technology and communications systems, or those of third parties that we rely upon, could
adversely affect our business, financial condition and results of operations.
The availability of our products and services depends on the continuing operation of our information technology and communications
systems. Any damage to or failure of our systems, or those of third parties that we rely upon (e.g. , co-
location providers for data servers, storage
devices, our registry DNS services provider for our registry and network access) could result in interruptions in our service, which could reduce
our revenue and profits, and damage our brand. Our systems are also vulnerable to damage or interruption from natural disasters, terrorist
attacks, power loss, telecommunications failures, computer viruses or other attempts to harm our systems. We, and in particular our registrar
service, have experienced an increasing number of computer distributed denial of service attacks which have forced us to shut down certain of
our websites, including eNom.com. We have implemented certain defenses against these attacks, but we may continue to be subject to such
attacks, and future denial of service attacks may cause all or portions of our websites to become unavailable. In addition, some of our data
centers are located in areas with a high risk of major earthquakes. Our data centers are also subject to break-ins, sabotage and intentional acts of
vandalism, and to potential disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully redundant,
and our disaster recovery planning is currently underdeveloped and does not account for all eventualities. The occurrence of a natural disaster, a
decision to close a facility we are using without adequate notice for financial reasons or other unanticipated problems at our data centers could
result in lengthy interruptions in our service.
Furthermore, third-party service providers may experience an interruption in operations or cease operations for any reason. If we are
unable to agree on satisfactory terms for continued data center hosting relationships, we would be forced to enter into a relationship with other
service providers or assume hosting responsibilities ourse lves. If we are forced to switch hosting facilities, we may not be successful in finding
an alternative service provider on acceptable terms or in hosting the computer servers ourselves. We may also be limited in our remedies against
these providers in the event of a failure of service. We also rely on third-party providers for components of our technology platform, such as
hardware and software providers and our registry DNS services provider for our registry. A failure or limitation of service or available capacity
by any of these third-party providers could adversely affect our business, financial condition and results of operations.
Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could
diminish the value of our services and cause us to lose customers and revenue.
When a user visits our websites or certain pages of our customers’ websites, we use technologies, including “cookies,” to collect
information related to the user, such as the user’s Internet Protocol, or IP, address, demographic information, and history of the user’s
interactions with content or advertisements previously delivered by us. The information that we collect about users helps us deliver appropriate
content and targeted advertising to the user. A variety of federal, state and international laws and regulations govern the
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competitors will not design around our protected systems and technology; or
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we will not lose the ability to assert our intellectual property rights against others.