Tucows 2015 Annual Report Download - page 27

In order to succeed in the hosted email business, our email product must remain competitive. We believe that
some of the competitive factors affecting the market for hosted email services include:
• breadth of platform features and functionality of our offering and the sophistication and innovation of our
competitors;
• scalability, reliability, performance and ease of expansion and upgrade;
• ease of integration with customers’ existing systems; and
• flexibility to enable customers to manage certain aspects of their systems and leverage outsourced services in
other cases when resources, costs and time to market reasons favor an outsourced offering.
We believe competition will continue to be strong and further increase as our market attracts new competition,
current competitors aggressively pursue customers, increase the sophistication of their offerings and as new participants
enter the market. Many of our current and potential competitors have longer operating histories, larger customer bases,
greater brand recognition in the business and greater financial, marketing and other resources than we do. Any delay in our
development and delivery of new services or enhancement of existing services would allow our competitors additional
time to improve their product offerings and provide time for new competition to develop and market messaging services.
Increased competition could result in pricing pressures, reduced operating margins and loss of market share, any of which
could cause our financial results to decline.
If we are unable to maintain our relationships with our customers our revenue may decline.
Our network of resellers is our principal source for distributing services. We also rely on our resellers to market,
promote and sell our services. Our ability to increase revenues in the future will depend significantly on our ability to
maintain our reseller network, to sell more services through existing resellers and to develop our relationships with existing
resellers by providing customer and sales support and additional products. Resellers have no obligations to distribute our
services and may stop doing so at any time. If we are not able to maintain our relationships with resellers, our ability to
distribute our services will be harmed, and our revenue may decline.
Disputes over registration of domain names, the activities of our reseller’s customers or the content of their websites
could subject us to liability and could negatively affect the public’s perception of our corporate image.
As a registrar of domain names services, we may be subject to potential liability for illegal activities by our
resellers’ customers on their websites. We provide an automated service that enables users to register domain names. We
do not monitor or review, nor does our accreditation agreement with ICANN require that we monitor or review, the
appropriateness of the domain names we register for our customers or the content of their websites, and we have no control
over the activities in which these customers engage. While we have policies in place to terminate domain names or to take
other action if presented with evidence of illegal conduct, customers could nonetheless engage in prohibited activities
without our knowledge.
Several bodies of law may be deemed to apply to us with respect to various customer activities. Because we
operate in a relatively new and rapidly evolving industry, and since our industry is characterized by rapid changes in
technology and in new and growing illegal activity, these bodies of laws are constantly evolving. Some of the laws that
apply to us with respect to certain customer activities include the following:
• The Communications Decency Act of 1996, or CDA, generally protects online service providers, such as
Tucows, from liability for certain activities of their customers, such as posting of defamatory or obscene
content, unless the online service provider is participating in the unlawful conduct. Notwithstanding the general
protections from liability under the CDA, we may nonetheless be forced to defend ourselves from claims of
liability covered by the CDA, resulting in an increased cost of doing business.
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