Yahoo 2006 Annual Report Download - page 31

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 distribution 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 circumstances. 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.
Changes in regulations or user concerns regarding privacy and protection of user data could adversely
affect our business.
Federal, state, foreign and international laws and regulations may govern the collection, use, retention, sharing and
security of data that we receive from our users and partners. In addition, we have and post on our website our own
privacy policies and practices concerning the collection, use and disclosure of user data. Any failure, or perceived
failure, by us to comply with our posted privacy policies or with any data-related consent orders, Federal Trade
Commission requirements or other federal, state or international privacy-related laws and regulations could result in
proceedings or actions against us by governmental entities or others, which could potentially have an adverse effect
on our business.
Further, failure or perceived failure to comply with our policies or applicable requirements related to the collection,
use, sharing or security of personal information or other privacy-related matters could result in a loss of user
confidence in us, damage to the Yahoo! brands, and ultimately in a loss of users, partners or advertisers, which could
adversely affect our business.
A large number of legislative proposals pending before the United States Congress, various state legislative bodies
and foreign governments concern data privacy and retention issues related to our business. It is not possible to
predict whether or when such legislation may be adopted. Certain proposals, if adopted, could impose requirements
that may result in a decrease in our user registrations and revenues. In addition, the interpretation and application of
user data protection laws are in a state of flux. These laws may be interpreted and applied inconsistently from
country to country and inconsistently with our current data protection policies and practices. Complying with these
varying international requirements could cause us to incur substantial costs or require us to change our business
practices in a manner adverse to our business.
Acquisitions and strategic investments could result in adverse impacts on our operations and in unantici-
pated liabilities.
We have acquired, and have made strategic investments in, a number of companies (including through joint
ventures) in the past and expect to make additional acquisitions and strategic investments in the future. Such
transactions may result in dilutive issuances of equity securities, use of our cash resources, incurrence of debt and
amortization of expenses related to intangible assets. Our acquisitions and strategic investments to date were
accompanied by a number of risks, including:
• the difficulty of assimilating the operations and personnel of our acquired companies into our operations;
• the potential disruption of our ongoing business and distraction of management;
• additional operating losses and expenses of the businesses we acquired or in which we invested;
• the difficulty of integrating acquired technology and rights into our services and unanticipated expenses related to
such integration;
• the failure to successfully further develop acquired technology resulting in the impairment of amounts currently
capitalized as intangible assets;
• the potential for patent and trademark infringement claims against the acquired company;
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