Etsy 2015 Annual Report Download - page 29

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We are subject to a variety of laws and regulations in the United States and around the world, including those relating to traditional businesses, such as
employment laws and taxation, and newer laws and regulations focused on the Internet and online commerce, such as payment systems, privacy, anti-spam,
data protection, electronic contracts, intellectual property and consumer protection. These laws and regulations are continuously evolving, and compliance is
costly and can require changes to our business practices and significant management time and effort. Additionally, it is not always clear how existing laws
apply to the Internet as many of these laws do not address the unique issues raised by the Internet or online commerce.
For example, laws relating to online privacy are evolving differently in different jurisdictions. Federal, state and non-U.S. governmental authorities, as well as
courts interpreting the laws, continue to evaluate the privacy implications of the use of third-party “cookies,” “web beacons” and other methods of online
tracking. The United States, the European Union and other governments have enacted or are considering legislation that could significantly restrict the
ability of companies and individuals to collect and store user information, such as by regulating the level of consumer notice and consent required before a
company can employ cookies or other electronic tracking tools.
Some providers of consumer devices and web browsers have implemented, or have announced plans to implement, ways to block tracking technologies
which, if widely adopted, could also result in online tracking methods becoming significantly less effective. Any reduction in our ability to make effective
use of such technologies could harm our ability to personalize the experience of Etsy buyers, increase our costs and limit our ability to attract and retain Etsy
sellers and Etsy buyers on cost-effective terms. As a result, our business could be adversely affected.
In some cases, non-U.S. privacy, data protection, consumer protection, e-commerce and other laws and regulations are more restrictive than those in the
United States and are enforced aggressively.
For example, the European Union traditionally has imposed stricter obligations and provided for more onerous penalties under such laws than the United
States. Consequently, the expansion of our operations internationally may require changes to the ways we display, collect and use consumer information.
Existing and future laws and regulations enacted by federal, state or non-U.S. governments could impede the growth or use of the Internet or online
commerce. It is also possible that governments of one or more countries may seek to censor content available on our platform or may even attempt to block
access to our platform. If we are restricted from operating in one or more countries, our ability to attract and retain Etsy sellers and Etsy buyers may be
adversely affected and we may not be able to grow our business as we anticipate.
We strive to comply with all applicable laws, but they may conflict with each other, and by complying with the laws or regulations of one jurisdiction, we
may find that we are violating the laws or regulations of another jurisdiction. Despite our efforts, we may not have fully complied in the past and may not in
the future. If we become liable under laws or regulations applicable to us, we could be required to pay significant fines and penalties, and we may be forced to
change the way we operate. That could require us to incur significant expenses or to discontinue certain services, which could negatively affect our business.
Additionally, if third parties with whom we work violate applicable laws or our policies, those violations could result in other liabilities for us and could
harm our business.
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Although we do not create or take possession of the items listed in our marketplace by Etsy sellers, we frequently receive communications alleging that items
listed in our marketplace infringe third-party copyrights, trademarks, patents or other intellectual property rights. We have intellectual property complaint
and take-down procedures in place to address these communications, and we believe such procedures are important to promote confidence in our
marketplace. We follow these procedures to review complaints and relevant facts to determine the appropriate action, which may include removal of the item
from our marketplace and, in certain cases, closing the shops of Etsy sellers who repeatedly violate our policies.
Our procedures may not effectively reduce or eliminate our liability. In particular, we may be subject to civil or criminal liability for activities carried out by
Etsy sellers on our platform, especially outside the United States where we may be less protected under local laws than we are in the United States. Under
current U.S. copyright law and the Communications Decency Act, we may benefit from statutory safe harbor provisions that protect us from liability for
content posted on our platform by Etsy sellers and Etsy buyers. However, trademark and patent laws do not include similar statutory provisions, and liability
for these forms of intellectual property is often determined by court decisions. These safe harbors and court rulings
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