Yahoo 2006 Annual Report Download - page 34

Internet as an advertising and commerce medium and so our operations in international markets may not develop at
a rate that supports our level of investment.
In international markets we compete with local Internet service providers that may have competitive
advantages.
In a number of international markets, especially those in Asia, Europe and Latin America, we face substantial
competition from local Internet service providers and other portals that offer search, communications and other
commercial services. Many of these companies have a dominant market share in their territories and are owned by
local telecommunications providers which give them a competitive advantage. Local providers of competing
online services may also have a substantial advantage over us in attracting users in their country due to more
established branding in that country, greater knowledge with respect to the tastes and preferences of users residing
in that country and/or their focus on a single market. Further, the local providers may have greater regulatory and
operational flexibility than Yahoo! due to the fact that we are subject to both United States and foreign regulatory
requirements. We must continue to improve our local offerings, become more knowledgeable about our local users
and their preferences, deepen our relationships with our local users as well as increase our branding and other
marketing activities in order to remain competitive and strengthen our international market position.
Our international operations are subject to increased risks which could harm our business, operating results
and financial condition.
In addition to uncertainty about our ability to continue to generate revenues from our foreign operations and expand
our international market position, there are certain risks inherent in doing business internationally, including:
• trade barriers and changes in trade regulations;
• difficulties in developing, staffing and simultaneously managing a large number of varying foreign operations as a
result of distance, language and cultural differences;
• stringent local labor laws and regulations;
• longer payment cycles;
• currency exchange rate fluctuations;
• political or social unrest or economic instability;
• import or export restrictions;
• seasonal volatility in business activity;
• risks related to government regulation or required compliance with local laws in certain jurisdictions, including
those more fully described above; and
• potentially adverse tax consequences.
One or more of these factors could harm our future international operations and consequently, could harm our
brand, business, operating results and financial condition.
We may be subject to legal liability for online services.
We host a wide variety of services that enable individuals and businesses to exchange information, generate content,
advertise products and services, conduct business and engage in various online activities on an international basis.
The law relating to the liability of providers of these online services for activities of their users is currently unsettled
both within the United States and internationally. Claims have been threatened and have been brought against us for
defamation, negligence, copyright or trademark infringement, unlawful activity, tort, including personal injury,
fraud, or other theories based on the nature and content of information that we provide links to or that may be posted
online or generated by our users or with respect to auctioned materials. In addition, Yahoo! was the subject of a
claim brought by certain entities in a French court regarding, among other things, the availability of certain content
within our services which was alleged to violate French law. We may be subject to similar actions in domestic or
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