Yahoo 2006 Annual Report Download - page 35

other international jurisdictions in the future. Our defense of any such actions could be costly and involve
significant time and attention of our management and other resources.
We also periodically enter into arrangements to offer third-party products, services or content under the Yahoo!
brand or via distribution on the Yahoo! Properties, including stock quotes and trading information. We may be
subject to claims concerning these products, services or content by virtue of our involvement in marketing,
branding, broadcasting or providing access to them, even if we do not ourselves host, operate, provide, or provide
access to these products, services or content. While our agreements with respect to these products, services and
content, often provide that we will be indemnified against such liabilities, the ability to receive such indemnification
depends on the financial resources of the other party to the agreement and any amounts received may not be
adequate to cover our liabilities.
It is also possible that, if any information provided directly by us contains errors or is otherwise negligently
provided to users, third parties could make claims against us. For example, we offer web-based e-mail services,
which expose us to potential risks, such as liabilities or claims resulting from unsolicited e-mail, lost or misdirected
messages, illegal or fraudulent use of e-mail, or interruptions or delays in e-mail service. Investigating and
defending any of these types of claims is expensive, even to the extent that the claims are without merit or do not
ultimately result in liability.
We may have difficulty scaling and adapting our existing technology architecture to accommodate increased
traffic and technology advances or requirements of our users and advertisers.
As one of the most highly trafficked websites on the Internet, Yahoo! delivers a growing number of products,
services and page views to an increasing number of users around the world. In addition, the products and services
offered by Yahoo! have expanded and changed significantly and are expected to continue to expand and change
rapidly in the future to accommodate new technologies and new means of content delivery, such as rich media audio
and video. Our future success will depend on our ability to adapt to rapidly changing technologies, to adapt our
products and services to evolving industry standards and to improve the performance and reliability of our products
and services. Rapid increases in the levels or types of use of our online properties and services could result in delays
or interruptions in our service.
Widespread adoption of new Internet, networking or telecommunications technologies or other technological
changes could require substantial expenditures to modify or adapt our services or infrastructure. The technology
architectures utilized for our services are highly complex and may not provide satisfactory support in the future, as
usage increases and products and services expand, change and become more complex. In the future, we may make
changes to our architectures and systems, including moving to completely new architectures and systems. Such
changes may be technologically challenging to develop and implement, may take time to test and deploy, may cause
us to incur substantial costs or data loss, and may cause users, advertisers, and affiliates to experience delays or
interruptions in our service. These changes, delays or interruptions in our service may cause users, advertisers and
affiliates to become dissatisfied with our service and move to competing providers of online services. Further, to the
extent that demands for our services increase, we will need to expand our infrastructure, including the capacity of
our hardware servers and the sophistication of our software. This expansion is likely to be expensive and complex
and require additional technical expertise. As we acquire users who rely upon us for a wide variety of services, it
becomes more technologically complex and costly to retrieve, store and integrate data that will enable us to track
each user’s preferences. Any difficulties experienced in adapting our architectures and infrastructure to accom-
modate increased traffic, to store user data and track user preferences, together with the associated costs and
potential loss of traffic, could harm our operating results, cash flows from operations and financial condition.
Our business depends on the continued growth and maintenance of the Internet infrastructure.
The success and the availability of our Internet-based products and services depends in part upon the continued
growth and maintenance of the Internet infrastructure itself, including its protocols, architecture, network back-
bone, data capacity and security. Spam, viruses, worms, spyware, denial of service attacks and other acts of malice
may affect not only the Internet’s speed, reliability and availability but also its continued desirability as a vehicle for
commerce, information and user engagement. If the Internet proves unable to meet the new threats and increased
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