America Online 2014 Annual Report Download - page 36

products and services may not be compatible on or supported by new hardware. A decline in the traffic and
engagement from these consumers could adversely affect our advertising and subscription revenue.
To the extent that we cannot generate consumer and advertiser awareness and adoption of our mobile
applications, content, products and services, including new forms of internet advertising for mobile and other
internet enabled devices, our business could be adversely impacted.
Global consumers are increasingly accessing and using the internet through devices other than personal
computers, such as smartphones, tablets and televisions. As consumer usage shifts away from personal
computers and laptops, we expect that our ability to grow advertising revenue will become increasingly
dependent on our ability to generate revenue from ads on mobile and other internet enabled devices such as set-
top boxes (e.g., Roku, Amazon Fire TV). In order for consumers to access and use our content, products and
services via these devices, we must continue to ensure that our content, products and services are compatible
with such devices. We need to continue to secure arrangements with device manufacturers and carriers to
promote prominent and effective distribution of our content, products and services. In addition to placement
agreements with wireless carriers and device manufacturers, currently we offer applications directly to
consumers for download from AOL Properties, the Apple App Store, the Google Play Store, or through other
distribution channels. We are dependent on the interoperability of our products with popular mobile operating
systems that we do not control, such as Android and iOS. To the extent a manufacturer or access provider makes
any changes in these systems or terms of service that decreases our products’ functionality, gives preferential
treatment to competitive products, or prevents our ability to show ads, this could adversely affect our usage and
revenue on mobile devices.
The amount of revenues earned in connection with mobile and other internet enabled devices is currently
small relative to total advertising revenues. Also, business models in the marketplace seem to be undergoing
experimentation and rapid change.
A disruption or failure of our networks and information systems, the internet or other technology may disrupt
our business.
Our business is heavily dependent on the availability of network and information systems and services,
other technologies, including those owned or licensed by third parties, and the internet. Shutdowns or service
disruptions caused by events such as criminal activity, sabotage or espionage, computer viruses, hacking and
other cyber-security attacks, router disruption, automated attacks such as denial of service attacks, power
outages, natural disasters, accidents, terrorism, equipment failure or other events within or outside our control
could adversely affect us and our consumers, including loss or compromise of data, service disruption, damage to
equipment and data and excessive call volume to call centers. Furthermore, such attacks are not always able to be
immediately detected, which means that we may not be in a position to promptly address the attacks or to
implement adequate preventative measures. Such events could result in large expenditures necessary to recover
data, or repair or replace such networks or information systems or to protect them from similar events in the
future. As not all of our systems are fully redundant, some data or systems might not be recoverable after such
events. In addition, not all of our systems operate in the same data centers. Significant incidents could result in a
disruption of parts of our business, consumer dissatisfaction, damage to our brands, legal costs or liability, and a
loss of consumers or revenues.
If our network and data security measures are breached, our products and services may be perceived as not
being secure, consumers and customers may curtail or stop using our products and services and we may incur
significant legal and financial costs.
Our products and services involve the storage and transmission of our consumers’ and customers’ personal
and proprietary information in our facilities and on our equipment, networks and corporate systems. Network and
data security breaches expose us to a risk of loss of this information, government enforcement actions and private
litigation, remediation costs, increased costs for security measures, loss of revenue, damage to our reputation and
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