Expedia 2009 Annual Report Download - page 27

China restrict foreign investment in areas including the air-ticketing, travel agency, internet content provision,
mobile communication and related businesses. Although we have established effective control through a series of
agreements between the companies in which our Chinese investments are held and their affiliated Chinese
entities, future developments in the interpretation or enforcement of Chinese laws and regulations or a dispute
relating to these agreements could restrict our ability to operate or restructure these entities or to engage in
strategic transactions. Finally, China does not have treaties with the United States or most other western countries
providing for the reciprocal recognition and enforcement of judgments of courts. As a result, court judgments
obtained in jurisdictions with which China does not have treaties on reciprocal recognition of judgment may be
difficult or impossible to enforce in China.
Our processing, storage, use and disclosure of personal data could give rise to liabilities as a result of
governmental regulation, conflicting legal requirements, differing views of personal privacy rights, or data
security breaches.
In the processing of our traveler transactions, we receive and store a large volume of personally identifiable
information and we rely on information collected online for purposes of advertising to visitors to our websites.
This information is increasingly subject to legislation, regulations and industry policies in numerous jurisdictions
around the world. These requirements and restrictions are not necessarily consistently applied. This government
and industry action is typically intended to protect the privacy and security of information that is collected,
processed and transmitted in or from the governing jurisdiction. We could be adversely affected if legislation,
regulations or other requirements are expanded to require changes in our current business practices or if
governing jurisdictions or industry groups interpret or implement their requirements in ways that negatively
affect our business, financial condition and results of operations. As privacy and data protection have become
more sensitive issues for regulators and consumers, we may also become exposed to potential liabilities as a
result of differing views on the protections that should apply to travel and/or online data.
We cannot guarantee that our security measures will prevent data breaches. In addition, certain of our
acquired companies may not have the same standards related to data collection, storage and transfer that Expedia
has historically maintained. Failure to improve their standards or a substantial data breach in any of our
businesses could significantly harm our business, damage our reputation, expose us to a risk of loss or litigation
and possible liability and/or cause customers and potential customers to lose confidence in our security, which
would have a negative effect on the value of our brands.
These and other privacy and security developments that are difficult to anticipate could adversely affect our
business and financial performance.
Acquisitions could result in operating and financial difficulties.
Our future growth may depend, in part, on acquisitions. To the extent that we grow through acquisitions, we
will face the operational and financial risks that commonly accompany that strategy. We would also face
operational risks, such as failing to assimilate the operations and personnel of the acquired businesses, disrupting
their ongoing businesses, increased complexity of our business, impairing management resources and their
relationships with employees and travelers as a result of changes in their ownership and management. Further,
the evaluation and negotiation of potential acquisitions, as well as the integration of an acquired business, may
divert management time and other resources. Some acquisitions may not be successful and their performance
may result in the impairment of their carrying value.
Certain financial and operational risks related to acquisitions that may have a material impact on our
business are:
• Use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions may limit
other potential uses of our cash, including stock repurchases, dividend payments and retirement of
outstanding indebtedness;
• Amortization expenses related to acquired intangible assets and other adverse accounting consequences;
• Costs incurred in identifying and performing due diligence on potential acquisition targets that may or
may not be successful;
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