ServiceMagic 2012 Annual Report Download - page 17

Table of Contents
selected by our users. These technologies, applications and policies adversely impact our ability to generate search queries through our
Applications, which in turn adversely impacts our revenues. Technologies have also been introduced that can block the display of advertisements
on web pages and that provide users with the ability to opt out of our advertising products. Our failure to successfully modify our toolbars and
other Applications 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 success also depends, in part, on our ability to develop and monetize mobile versions of our products and services. While most of our
users currently access our products and services through personal computers, users of (and usage volumes on) mobile devices, including tablets,
continue to increase relative to those of personal computers. While we have developed mobile versions of certain of our products and services
and intend to continue to do so in the future, we have limited experience with mobile applications, both in terms of development and
monetization. Moreover, mobile versions of our products and services that we develop may not be compelling to users and/advertisers. Even if
we are able to develop mobile applications that resonate with users and advertisers, the success of these applications is dependent on their
interoperability with various mobile operating systems, technologies, networks and standards that we do not control and any changes in any of
these things that compromise the quality or functionality of our products and services could adversely impact usage of our products and services
on mobile devices and, in turn, our ability to attract advertisers. Lastly, as the adoption of mobile devices becomes more widespread, the usage
of certain of our products and services may not translate to mobile devices, which shift could adversely affect our business, financial condition
and results of operations if we are unable to replace the related revenues.
The processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting
legal requirements or differing views of personal privacy rights.
We receive, transmit and store a large volume of personal information and other user data (including credit card data) in connection with the
processing of search queries, the provision of online products and services, transactions with users and customers and advertising on our
websites. The sharing, use, disclosure and protection of this information are determined by the respective privacy and data security policies of
our various businesses. These policies are, in turn, subject to federal, state and foreign laws regarding privacy and the storing, sharing, use,
disclosure and protection of personal information and user data. For example, if an online service provider fails to comply with its privacy
policy, it could become subject to an investigation and proceeding brought by the U.S. Federal Trade Commission under the Federal Trade
Commission Act, as well as a private lawsuit under various U.S. federal and state laws. In general, personal information is increasingly subject to
legislation and regulation in numerous jurisdictions around the world, the intent of which is to protect the privacy of personal information that is
collected, processed and transmitted in or from the governing jurisdiction.
U.S. legislators and regulators may enact new laws and regulations regarding privacy and data security. In February 2012, the White House
released a proposed Consumer Privacy Bill of Rights, which is intended to serve as a framework for new privacy legislation. In March 2012, the
U.S. Federal Trade Commission released a staff report making recommendations for businesses and policy makers in the area of consumer
privacy. Similarly, new privacy laws and directives abroad, particularly in Europe, are being proposed and implemented. In addition, existing
privacy laws that were intended for brick-and-
mortar businesses could be interpreted in a manner that would extend their reach to our businesses.
New laws and regulations (or new interpretations of existing laws) in this area may make it more costly to operate our businesses and/or limit
our ability to engage in certain types of activities, such as targeted advertising, which could adversely affect our business, financial condition and
results of operations.
As privacy and data protection have become more sensitive issues, we may also become exposed to potential liabilities as a result of
differing views on the privacy of consumer and other user data collected by our businesses. Also, we cannot guarantee that our security
measures will prevent security breaches. In the case of security breaches involving personal credit card data, credit card companies could curtail
our ability to transact payments and impose fines for failure to comply with Payment Card Industry (PCI) Data Security Standards. The failure
of any of our businesses, or their various third party vendors and service providers, to comply with applicable privacy policies, federal, state or
foreign privacy laws and regulations or PCI standards and/or the unauthorized release of personal information or other user data for any reason
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 income tax
liability is always subject to review by applicable tax authorities and we
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