America Online 2010 Annual Report Download - page 27

Table of Contents
potentially, to pay damages. Additionally, we may be exposed to liability or substantially increased costs if a commercial partner does not honor its
contractual obligation to indemnify us for intellectual property infringement claims made by third parties. The occurrence of any of these events could
adversely affect our business.
As a publisher of original content, we also face risks of periodic tort claims such as libel, defamation or improper use of publicity rights in the course of
our journalism and news reporting endeavors, as well as infringement claims such as plagiarism. These claims, whether or not they have merit, may be time
consuming or costly to resolve.
The misappropriation, release, loss or misuse of AOL data or consumer or other data could adversely affect our business.
Our business utilizes significant amounts of data about our business, consumers and our advertising and publishing partners in order to deliver our
content, products and services and our advertising solutions. The misappropriation, release, loss or misuse of this data, whether by accident, omission or as the
result of criminal activity, sabotage or espionage, computer hacking or viruses, natural disasters, terrorism, equipment failure or other events, could lead to
negative publicity, harm to our reputation, customer dissatisfaction, regulatory enforcement actions or individual or class-action lawsuits or significant
expenditures to recover the data or protect data from similar releases in the future, and may otherwise adversely affect our business. Furthermore, as not all of
our systems are fully redundant, some data or systems might not be recoverable in a catastrophic event or other significant service disruption.
Changes to federal, state or international laws or regulations applicable to our business could adversely affect our business.
Our business is subject to a variety of federal, state and international laws and regulations, including those with respect to privacy, advertising
generally, consumer protection, content regulation, intellectual property, defamation, child protection, advertising to and collecting information from children,
taxation, employment classification and billing. These laws and regulations and the interpretation or application of these laws and regulations could change. In
addition, new laws or regulations affecting our business could be enacted. These laws and regulations are frequently costly to comply with and may divert a
significant portion of management's attention. If we fail to comply with these applicable laws or regulations, we could be subject to significant liabilities
which could adversely affect our business.
There are many federal, state and international laws that may affect our business including measures to regulate consumer privacy, the use of
copyrighted material, the collection of certain data, network neutrality, patent litigation, cyber security, child protection, subpoena and warrant processes,
employee classification and others.
In addition, most states have enacted legislation governing the breach of data security in which sensitive consumer information is released or accessed.
If we fail to comply with these applicable laws or regulations we could be subject to significant liabilities which could adversely affect our business.
Many of our advertising partners are subject to industry specific laws and regulations or licensing requirements, including advertisers in the following
industries: pharmaceuticals, online gaming, alcohol, adult content, tobacco, firearms, insurance, securities brokerage, real estate, sweepstakes, free trial offers,
automatic renewal services and legal services. If any of our advertising partners fail to comply with any of these licensing requirements or other applicable
laws or regulations, or if such laws and regulations or licensing requirements become more stringent or are otherwise expanded, our business could be
adversely affected. Furthermore, these laws may also limit the way we advertise our products and services or cause us to incur compliance costs, which could
affect our revenues and could further adversely impact our business.
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