Travelzoo 2004 Annual Report Download - page 26

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Our software is written using open standards, such as Visual Basic Script, and HTML, and interfaces
with products from Microsoft. We have standardized our hardware platform on HP servers and Cisco
switches.
Competition
We compete with large Internet portal sites, such as About.com, America Online, Lycos, MSN and
Yahoo!, that oÅer listings or other advertising opportunities for travel companies. We also compete with search
engines like Google or Overture that oÅer pay-per-click listings. In addition, we compete with newspapers,
magazines and other traditional media companies that operate Web sites which provide advertising opportuni-
ties. We expect to face additional competition as other established and emerging companies, including print
media companies, enter our market. We believe that the primary competitive factors are price and
performance.
Many of our current and potential competitors have longer operating histories, signiÑcantly greater
Ñnancial, technical, marketing and other resources and larger client bases than we do. In addition, current and
potential competitors may make strategic acquisitions or establish cooperative relationships to expand their
businesses or to oÅer more comprehensive solutions.
New technologies could increase the competitive pressures that we face. The development of competing
technologies by market participants or the emergence of new industry standards may adversely aÅect our
competitive position. Competition could result in reduced margins on our services, loss of market share or less
use of our products by travel companies and consumers. If we are not able to compete eÅectively with current
or future competitors as a result of these and other factors, our business could be materially adversely aÅected.
Government Regulation and Legal Uncertainties
There are increasing numbers of laws and regulations pertaining to the Internet, including laws and
regulations relating to user privacy, liability for information retrieved from or transmitted over the Internet,
online content regulation, user privacy and domain name registration. Moreover, the applicability to the
Internet of existing laws governing issues such as intellectual property ownership and infringement, copyright,
patent, trademark, trade secret, obscenity, libel and personal privacy is uncertain and developing.
Privacy Concerns. Government agencies are considering adopting regulations regarding the collection
and use of personal identifying information obtained from individuals when using Internet sites or e-mail
services. While we have implemented and intend to implement additional programs designed to enhance the
protection of the privacy of our users, these programs may not conform to any regulations which may be
adopted by these agencies. In addition, these regulatory and enforcement eÅorts may adversely aÅect our
ability to collect demographic and personal information from users, which could have an adverse eÅect on our
ability to provide advertisers with demographic information. The European Union (the ""EU'') has adopted a
directive that imposes restrictions on the collection and use of personal data. The directive could impose
restrictions that are more stringent than current Internet privacy standards in the United States. The directive
may adversely aÅect our activities to the extent that we may seek to collect data from users in EU member
countries.
Anti-Spam Legislation. In December 2003, the CAN-SPAM Act of 2003, a new federal anti-spam law,
was enacted. This new law pre-empts various state anti-spam laws and establishes a single standard for e-mail
marketing and customer communications. We believe that this new law will overall beneÑt our business as we
do not use spam techniques or practices and will beneÑt now that others are prohibited from doing so.
Domain Names. Domain names are the user's Internet ""addresses.'' The current system for registering,
allocating and managing domain names has been the subject of litigation and of proposed regulatory reform.
We own the domain names for travelzoo.com, travelzoo.net, travelzoo.org, travelzoo.ca, travelzoo.co.uk,
weekend.com, and weekends.com, and have registered ""Travelzoo'' and ""Weekend.com'' as trademarks in the
United States. Because of these protections, it is unlikely, yet possible, that third parties may bring claims for
infringement against us for the use of our domain name and trademark. In the event such claims are
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