ServiceMagic 2010 Annual Report Download - page 20

Table of Contents
Any failure to attract and acquire new, and retain existing, traffic, users and customers in a cost-effective manner could adversely affect our
business, financial condition and results of operations.
We may not be able to adapt quickly enough to changing industry standards.
The e-commerce industry is characterized by evolving industry standards, coupled with frequent and related new product and service
introductions and enhancements. The development of new product and service introductions and enhancements in response to evolving industry
standards requires significant time and resources and we may not be able to adapt quickly enough (and/or in a cost-effective manner) to these
changes or appropriately time the introduction of new products, services and enhancements to the market and our failure to do so could adversely
affect our business, financial condition and results of operations.
The continued widespread adoption of new internet and telecommunications technologies and devices or other technological changes could
require us to modify or adapt our services or infrastructures and our failure to do so could render our existing websites, services and proprietary
technologies obsolete, which could adversely affect our business, financial condition and results of operations. For example, user and usage
volumes on mobile devices continue to increase relative to those of personal computers. The lower resolution, functionality, display limitations
and memory associated with mobile devices could make the use of our various services through these devices difficult. While we have
developed mobile versions of certain of our services, we have limited experience with these applications and they may not be compelling to
users. Furthermore, existing agreements across our business may need to be amended to cover the provision of our services on mobile devices,
which the counterparties may be unwilling to do.
Furthermore, in the case of certain of our search services, third parties have introduced (and continue to introduce) new technologies.
applications and policies that may interfere with the ability of our users to access or utilize some of our services generally or otherwise make
users less likely to use our services (such as through the introduction and features and/or processes that make the access and use of our services
cumbersome relative to those of our competitors). For example, third parties have introduced technologies and applications that prevent users
from downloading toolbars generally and/or have features and policies that significantly lessen the likelihood that users will download our
toolbars and that previously downloaded toolbars will remain in active use, such as features that interfere with the functionality of search boxes
embedded within our toolbars and the maintenance of home page and other settings previously selected by users. Third parties have also
introduced technologies and applications that are either not compatible with (or otherwise interfere with) the "search assistant" function
embedded within our toolbars, pursuant to which our toolbars generate search results for users that receive "DNS," "404" and other errors in
response to search queries entered into search boxes embedded within our toolbars or the address bar of their web browsers. These technologies
and applications adversely impact our ability to generate search queries through our toolbars, which in turn adversely impacts our revenues. Our
failure to successfully modify our toolbars in a cost-effective manner in response to the introduction and adoption of these new technologies and
applications could adversely affect our business, financial condition and results of operations.
Our estimated income taxes could be materially different from income taxes that we ultimately pay.
We are subject to income taxes in both the United States and numerous jurisdictions abroad. Significant judgment and estimation is required
in determining our provision for income taxes and related matters. In the ordinary course of our business, there are many transactions and
calculations where the ultimate tax determinations are uncertain or otherwise subject to interpretation. Our determination of our tax liability is
always subject to review by applicable tax authorities and we are currently subject to audits in a number of jurisdictions. Although we believe
our tax estimates and related determinations are reasonable and appropriate, relevant taxing authorities may disagree. The ultimate outcome of
any such audits and reviews could be materially different from estimates and determinations reflected in our historical income
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