Enom 2013 Annual Report Download - page 33

Many applicable laws were adopted prior to the advent of the Internet and do not contemplate or address the unique issues of the Internet.
Moreover, the applicability and scope of the laws that do address the Internet remain uncertain. For example, the laws relating to the liability of
providers of onl ine services are evolving. Claims have been either threatened or filed against us under both U.S. and foreign laws for
defamation, copyright infringement, patent infringement, privacy violations, cybersquatting and trademark infringement. In the future, claims
may also be brought against us based on tort law liability and other theories based on our content, products and services or content generated by
our users.
We receive, process and store large amounts of personal data of users on our owned and operated websites and from our freelance creative
professionals. Our privacy and data security policies govern the collection, use, sharing, disclosure and protection of this data. The storing,
sharing, use, disclosure and protection of personal information and user data are subject to federal, state and international privacy laws, the
purpose of which is to protect the privacy of personal information that is collected, processed and transmitted in or from the governing
jurisdiction. If requirements regarding the manner in which certain personal information and other user data are processed and stored change
significantly, our business may be adversely affected, impacting our financial condition and results of operations. In addition, we may be
exposed to potential liabilities as a result of differing views on the level of privacy required for consumer and other user data we collect. We may
also need to expend significant resources to protect against security breaches, including encrypting personal information, or remedy breaches
after they occur, including notifying each person whose personal data may have been compromised. Our failure or the failure of various third-
party vendors and service providers to comply with applicable privacy policies or applicable laws and regulations or any compromise of security
that results in the unauthorized release of personal information or other user data could adversely affect our business, revenue, financial
condition and results of operations.
Our business operations in countries outside the United States are subject to a number of U.S. federal laws and regulations, including
restrictions imposed by the Foreign Corrupt Practices Act, or FCPA, as well as trade sanctions administered by OFAC and the U.S. Commerce
Department. The FCPA is intended to prohibit bribery of foreign officials or parties and requires public companies in the United States to keep
books and records that accurately and fairly reflect those companies’ transactions. OFAC and the U.S. Commerce Department administer and
enforce economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and
individuals.
If we fail to comply with these laws and regulations, we could be exposed to claims for damages, financial penalties, reputational harm,
incarceration of our employees or restrictions on our operations, which could increase our costs of operations, reduce our profits or cause us to
forgo opportunities that would otherwise support our growth.
We may not succeed in establishing our businesses internationally, which may limit our future growth.
One potential area of growth for our content and media service offering is in the international markets. We have launched eHow sites in
the United Kingdom and Germany, as well as eHow en Español and eHow Brasil (Spanish and Portuguese language sites that target both the
U.S. and the worldwide Spanish/Portuguese-speaking market), and we have operations in Buenos Aires, Argentina to support these efforts. We
are also exploring launches in certain other countries and we have been investing in translation capabilities for our technologies. Additionally,
our domain name business currently operates in the United States and through foreign subsidiaries in Dublin, Ireland; Ottawa, Canada; George
Town, Grand Cayman; and Queensland, Australia, and it may continue to expand into additional international markets. Operating
internationally, where we have limited experience, exposes us to additional risks and operating costs. We cannot be certain that we will be
successful in introducing or marketing our services internationally or that our services will gain market acceptance or that growth in commercial
use of the Internet internationally will continue. There are risks inherent in conducting business in international markets, including the need to
localize our products and services to foreign customers’ preferences and customs, difficulties in managing operations due to language barriers,
distance, staffing and cultural differences, application of foreign laws and regulations to us, tariffs and other trade barriers, fluctuations in
currency exchange rates, establishing management systems and infrastructures, reduced protection for intellectual property rights in some
countries, changes in foreign political and economic conditions, and potentially adverse tax consequences. Our inability to expand and market
our products and services internationally could have a negative effect on our future growth prospects and on our business, financial condition
and results of operations.
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taxation;
1
domain name registration; and
1
online advertising and marketing, including email marketing and unsolicited commercial email.