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at any time by the advertiser or by us. Marketing agreements often have payments dependent upon usage or click-
through levels. Accordingly, it is difficult to forecast display
revenue accurately. In addition, our expense levels are based in part on expectations of future revenue. The state of the global economy and availability of capital has impacted
and could further impact the advertising spending patterns of existing and potential advertisers. Any reduction in spending by, or loss of, existing or potential advertisers would
negatively impact our revenue and operating results. Further, we may be unable to adjust our expenses and capital expenditures quickly enough to compensate for any
unexpected revenue shortfall.
If our Business Cloud Services segment experiences excessive fraudulent activity or cannot meet evolving credit card company merchant standards, we could incur
substantial costs and lose the right to accept credit cards for payment and our subscriber base could decrease significantly.
A significant number of our paid cloud services subscribers authorize us to bill their credit card accounts directly for all service fees charged by us. If people pay for
these services with stolen credit cards, we could incur substantial unreimbursed third-
party vendor costs. We also incur losses from claims that the customer did not authorize the
credit card transaction to purchase our service. If the numbers of unauthorized credit card transactions become excessive, we could be assessed substantial fines for excess
chargebacks and could lose the right to accept credit cards for payment. In addition, credit card companies may change the merchant standards required to utilize their services
from time to time. If we are unable to meet these new standards, we could be unable to accept credit cards. Substantial losses due to fraud or our inability to accept credit card
payments, which could cause our paid cloud services subscriber base to significantly decrease, could have a material adverse effect on our business, prospects, financial
condition, operating results and cash flows.
A system failure or security breach could delay or interrupt service to our customers, harm our reputation or subject us to significant liability.
Our operations are dependent on our network being free from interruption by damage from fire, earthquake, power loss, telecommunications failure, unauthorized entry,
computer viruses, cyber attacks or other events beyond our control. There can be no assurance that our existing and planned precautions of backup systems, regular data backups,
security protocols and other procedures will be adequate to prevent significant damage, system failure or data loss. Also, many of our services are web-
based, and the amount of
data we store for our users on our servers has been increasing. Despite the implementation of security measures, our infrastructure may be vulnerable to computer viruses,
hackers or similar disruptive problems caused by our subscribers, employees or other Internet users who attempt to invade public and private data networks. Further, in some
cases we do not have in place disaster recovery facilities for certain ancillary services. Currently, a significant number of our cloud services customers authorize us to bill their
credit or debit card accounts directly for all transaction fees charged by us. We rely on encryption and authentication technology to effect secure transmission of confidential
information, including customer credit and debit card numbers. Advances in computer capabilities, new discoveries in the field of cryptography or other developments may
result in a compromise or breach of the technology used by us to protect transaction data. Any system failure or security breach that causes interruptions or data loss in our
operations or in the computer systems of our customers or leads to the misappropriation of our or our customers' confidential information could result in significant liability to us
(including in the form of judicial decisions and/or settlements, regulatory findings and/or forfeitures, and other means), cause considerable harm to us and our reputation
(including requiring notification to customers, regulators, and/or the media) and deter current and potential customers from using our services. Any of these events could have a
material adverse effect on our business, prospects, financial condition, operating results and cash flows.
Our cloud services business is dependent on a small number of telecommunications carriers in each region and our inability to maintain agreements at attractive rates
with such carriers may negatively impact our business.
Our cloud services business substantially depends on the capacity, affordability, reliability and security of our network and services provided to us by our
telecommunications suppliers. Only a small number of carriers in each region, and in some cases only one carrier, offer the DID and network services we require. We purchase
certain telecommunications services pursuant to short-
term agreements that the providers can terminate or elect not to renew. As a result, any or all of our current carriers could
discontinue providing us with service at rates acceptable to us, or at all, and we may not be able to obtain adequate replacements, which could materially and adversely affect our
business, prospects, financial condition, operating results and cash flows.
The successful operation of our business depends upon the supply of critical elements and marketing relationships from other companies.
We depend upon third parties for several critical elements of our business, including various technology, infrastructure, customer service and marketing components.
We rely on private third-party providers for our Internet and other connections and
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