ServiceMagic 2011 Annual Report Download - page 16

Table of Contents
especially critical to our success. Competition for well-qualified employees across IAC and its various businesses is intense and our continued
ability to compete effectively depends, in part, upon our ability to attract new employees. While we have established programs to attract new
employees and provide incentives to retain existing employees, particularly our senior management, we cannot assure you that we will be able to
attract new employees or retain the services of our senior management or any other key employees in the future.
We depend upon arrangements with Google and any adverse change in this relationship could adversely affect our business, financial
condition and results of operations.
A substantial portion of our consolidated revenue is attributable to a paid listing supply agreement with Google that expires on March 31,
2016. Pursuant to this agreement, we display and syndicate paid listings provided by Google in response to search queries generated by users of
our search services that contain keywords selected and purchased by advertisers through Google. In exchange for making our search traffic
available to Google, we receive a share of the revenue generated by the paid listings supplied to us, as well as certain other search-related
services.
The amount of revenue we receive from Google depends upon a number of factors outside of our control, including the amount Google
charges for advertisements, the efficiency of Google's system in attracting advertisers and serving up paid listings in response to search queries
and parameters established by Google regarding the number and placement of paid listings displayed in response to search queries. In addition,
Google makes judgments about the relative attractiveness (to the advertiser) of clicks on paid listings from searches performed on our search
services and these judgments factor into the amount of revenue we receive. Changes to Google's paid listings network efficiency, its judgment
about the relative attractiveness of clicks on paid listings from our search services or the parameters applicable to the display of paid listings
could have an adverse effect on our business, financial condition and results of operations. Such changes could come about for a number of
reasons, including general market conditions, competition or policy and operating decisions made by Google.
Our paid listing supply agreement requires that we comply with certain guidelines promulgated by Google for the use of its brands and
services, including the manner in which Google's paid listings are displayed with search results, and that we establish guidelines to govern
certain activities of third parties to whom we syndicate paid listings, including the manner in which these parties drive search traffic to their
websites and display paid listings. Subject to certain limitations, Google may unilaterally update its policies and guidelines, which could in turn
require modifications to, or prohibit and/or render obsolete certain of, our products, services and/or business practices, which could be costly to
address or otherwise have an adverse effect on our business, financial condition and results of operations. Noncompliance with Google's
guidelines by us or the third parties to whom we syndicate paid listings or through which we secure distribution arrangements for our toolbars
could, if not cured, result in Google's suspension of some or all of its services to our websites or the websites of our third party partners, the
imposition of additional restrictions on our ability to syndicate paid listings or the termination of the paid listing supply agreement by Google.
The termination of the paid listing supply agreement by Google, the curtailment of IAC's rights under the agreement (whether pursuant to
the terms thereof or otherwise) or the failure of Google to perform its obligations under the agreement would have an adverse effect on our
business, financial condition and results of operations. In addition, our inability to obtain a renewal of our agreement with Google with
substantially comparable economic and other terms upon the expiration of our current agreement could have an adverse effect on our business,
financial condition and results of operations. If any of these events were to occur, we may not be able to find another suitable alternate paid
listings provider (or if an alternate provider were found, the economic and other terms of the agreement and
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