America Online 2011 Annual Report Download - page 27

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Table of Contents
Federal, state and international governmental authorities continue to evaluate the privacy implications inherent in the use of third-party web "cookies"
for behavioral advertising. We use cookies, which are small text files placed in a consumer's browser, to facilitate authentication, preference management,
research and measurement, personalization and advertisement and content delivery. In the Third Party Network, cookies or similar technologies help present,
target and measure the effectiveness of advertisements. The regulation of these "cookies" and other current online advertising practices could adversely affect
our business.
AOL operates in an environment of high scrutiny and regulatory uncertainty: The use of consumer data by online service providers and advertising
networks is a topic of active interest among a number of regulatory bodies at the national and state levels and the regulatory environment is unsettled.
Changes to products, technology and services made by third parties and consumers could adversely affect our business.
We are dependent on many products, technologies and services provided by third parties, including browsers, data and search indexes, in order for
consumers to use our content, products and services, as well as to deliver, measure, render and report advertising. Any changes made by these third parties or
consumers to functionality, features or settings of these products, technologies and services could adversely affect our business. For example, third parties
may develop, and consumers may install, software that is used to block display or search advertisements or delete cookies, or consumers may elect to
manually delete cookies more frequently. Likewise, search services providers may adjust their algorithms and indexes, which may hinder the ability of
consumers to reach and use our content, products and services. This risk is increased because there are a small number of search services providers and any
change made by one or more of these providers could significantly affect our business. We derive revenue from fees paid in connection with display
advertisements and search advertisements on websites. The widespread adoption of products and technologies or changes to current products, technologies
and services could adversely affect our business.
Acquisitions of other businesses could adversely affect our operations and result in unanticipated liabilities.
Since January 1, 2011, we have acquired The Huffington Post, goviral, and other smaller businesses and we may make additional acquisitions and
strategic investments in the future. The completion of acquisitions and strategic investments as well as the integration of acquired companies or assets involve
a substantial commitment of resources and we may fail to realize the anticipated benefits of such transactions and incur unanticipated liabilities that could
harm our business. In addition, past or future transactions may be accompanied by a number of risks, including:
• the uncertainty of our returns on investment due to the new and developing industries in which some of the acquired companies operate;
• the adverse effect of known potential liabilities or unknown liabilities, such as claims of patent or other intellectual property infringement,
associated with the companies acquired or in which we invest;
• the difficulty of integrating technology, administrative systems, personnel and operations of acquired companies into our services, systems and
operations and unanticipated expenses related to such integration;
• the potential loss or disengagement of key talent at acquired companies;
• the potential disruption of our ongoing business and distraction of our management;
• additional operating losses and expenses of the businesses we acquire or in which we invest and the failure of such businesses to perform as
expected;
• the failure to successfully further develop acquired technology, resulting in the impairment of amounts currently capitalized as intangible assets;
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