Yahoo 2004 Annual Report Download - page 26

• potentially adverse tax consequences.
One or more of these factors could harm our future international operations and consequently, could harm our business,
operating results, and financial condition.
We are subject to U.S. and foreign government regulation of the Internet which could subject us to claims and remedies including
monetary liabilities and limitations on our business practices.
We are subject to regulations and laws directly applicable to providers of Internet services both domestically and
internationally. The application of existing domestic and international laws and regulations to Yahoo! relating to issues
such as user privacy and data protection, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions,
financial market regulation, consumer protection, content regulation, quality of services, and intellectual property owner-
ship and infringement in many instances is unclear or unsettled. In addition, we will also be subject to any new laws and
regulations directly applicable to our activities. Further, the application of existing laws to Yahoo! or our subsidiaries
regulating or requiring licenses for certain businesses of our advertisers including, for example, distribution of
pharmaceuticals, alcohol, adult content, tobacco or firearms, as well as insurance and securities brokerage and legal
services, can be unclear. Internationally, we may also be subject to foreign laws and regulations that are inconsistent from
country to country. We may incur substantial liabilities for expenses necessary to comply with these laws and regulations
or penalties for any failure to comply. Compliance with these laws and regulations may also cause us to have to change
or limit our business practices in a manner adverse to our business.
A number of federal laws, including those referenced below impact our business. The Digital Millennium Copyright Act
(‘‘DMCA’’) is intended, in part, to limit the liability of eligible online service providers for listing or linking to third-
party Websites that include materials that infringe copyrights or other rights of others. Portions of the Communications
Decency Act (‘‘CDA’’) are intended to provide statutory protections to online service providers who distribute third party
content. Yahoo! relies on the protections provided by both the DMCA and CDA in conducting its business. Any changes
in these laws or judicial interpretations narrowing their protections will subject us to greater risk of liability and may
increase our costs of compliance with these regulations or limit our ability to operate certain lines of business. The
Children’s Online Protection Act and the Children’s Online Privacy Protection Act are intended to restrict the distribu-
tion of certain materials deemed harmful to children and impose additional restrictions on the ability of online services
to collect user information from minors. In addition, the Protection of Children From Sexual Predators Act of 1998
requires online service providers to report evidence of violations of federal child pornography laws under certain circum-
stances. The costs of compliance with these regulations may increase in the future as a result of changes in the
regulations or the interpretation of them. Further any failures on our part to comply with these regulations may subject
us to significant liabilities.
There are federal, state and international laws regarding privacy and protection of user data. We post, on our website, our
privacy policies and practices concerning the use and disclosure of user data. Any failure by us to comply with our posted
privacy policies, any consent orders from time to time entered into by us, Federal Trade Commission requirements or
other federal, state or international privacy-related laws and regulations could result in proceedings against us by govern-
mental entities or others which could potentially have an adverse effect on our business, results of operations and
financial condition. In this regard, there are a large number of legislative proposals before the United States Congress and
various state legislative bodies regarding privacy issues related to our business. It is not possible to predict whether or
when such legislation may be adopted, and certain proposals, if adopted, could impose requirements which may result in
a decrease our user registrations and revenues. In addition, the interpretation and application of user data protection laws
in Europe and other international jurisdictions is unclear and in a state of flux. There is a risk that these laws may be
interpreted and applied inconsistently from country to country and with our current data protection practices. Comply-
ing with these varying international requirements could cause us to incur substantial costs and to have to change our
business practices. Further, any failure by us to protect users privacy and data, could result in a loss of user confidence in
our services and ultimately in a loss of users which could adversely affect our business.
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