Google 2015 Annual Report Download - page 88

Table of Contents Alphabet Inc. and Google Inc.
84
Objections (SO) regarding the display and ranking of shopping search results. The EC also opened a formal investigation
into Android. We responded to the SO on August 27, 2015 and will continue to cooperate with the EC.
The Comision Nacional de Defensa de la Competencia in Argentina, the Competition Commission of India (CCI),
Brazil's Council for Economic Defense (CADE), the Canadian Competition Bureau (CCB), and the Federal
Antimonopoly Service (FAS) of the Russian Federation have also opened investigations into certain of our business
practices. In August 2015, we received the CCI Director General's report with interim findings of competition law
infringements regarding search and ads. In September 2015, FAS found that there has been a competition law
infringement in Android mobile distribution. We will respond to the CCI's report and have filed an appeal of the FAS
decision. In July 2015, the Taiwan Fair Trade Commission informed us that it was closing its antitrust investigations
of our business practices.
The state attorney general from Mississippi issued subpoenas in 2011 and 2012 in an antitrust investigation of
our business practices. We have responded to those subpoenas, and we remain willing to cooperate with them if they
have any further information requests.
Patent and Intellectual Property Claims
We have had patent, copyright, and trademark infringement lawsuits filed against us claiming that certain of our
products, services, and technologies infringe the intellectual property rights of others. Adverse results in these lawsuits
may include awards of substantial monetary damages, costly royalty or licensing agreements, or orders preventing
us from offering certain features, functionalities, products, or services, and may also cause us to change our business
practices, and require development of non-infringing products or technologies, which could result in a loss of revenues
for us and otherwise harm our business. In addition, the U.S. International Trade Commission (ITC) has increasingly
become an important forum to litigate intellectual property disputes because an ultimate loss for a company or its
suppliers in an ITC action could result in a prohibition on importing infringing products into the U.S. Since the U.S. is
an important market, a prohibition on importation could have an adverse effect on us, including preventing us from
importing many important products into the U.S. or necessitating workarounds that may limit certain features of our
products.
Furthermore, many of our agreements with our customers and partners require us to indemnify them for certain
intellectual property infringement claims against them, which would increase our costs as a result of defending such
claims, and may require that we pay significant damages if there were an adverse ruling in any such claims. Our
customers and partners may discontinue the use of our products, services, and technologies, as a result of injunctions
or otherwise, which could result in loss of revenues and adversely impact our business.
Other
We are also regularly subject to claims, suits, government investigations, and other proceedings involving
competition (such as the pending EC investigations described above), intellectual property, privacy, tax, labor and
employment, commercial disputes, content generated by our users, goods and services offered by advertisers or
publishers using our platforms, personal injury, consumer protection, and other matters. Such claims, suits, government
investigations, and other proceedings could result in fines, civil or criminal penalties, or other adverse consequences.
Certain of our outstanding legal matters include speculative claims for substantial or indeterminate amounts of
damages. We record a liability when we believe that it is probable that a loss has been incurred and the amount can
be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be
estimated, we disclose the possible loss. We evaluate, on a monthly basis, developments in our legal matters that
could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible
losses disclosed, and make adjustments as appropriate. Significant judgment is required to determine both likelihood
of there being and the estimated amount of a loss related to such matters.
With respect to our outstanding legal matters, based on our current knowledge, we believe that the amount or
range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on
our business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal
matters is inherently unpredictable and subject to significant uncertainties.
We expense legal fees in the period in which they are incurred.
Taxes
We are under audit by the Internal Revenue Service (IRS) and various other domestic and foreign tax authorities
with regards to income tax and indirect tax matters. We have reserved for potential adjustments to our provision for
income taxes and accrual of indirect taxes that may result from examinations by, or any negotiated agreements with,
these tax authorities, and we believe that the final outcome of these examinations or agreements will not have a