Yahoo 2009 Annual Report Download - page 21

Transition and implementation risks associated with our Search Agreement with Microsoft may adversely
affect our business and operating results.
Under our Search Agreement with Microsoft, Microsoft will be Yahoo!’s exclusive platform technology provider
for algorithmic and paid search services. The parties commenced implementation of the Search Agreement on
February 23, 2010. The global transition of Yahoo!’s algorithmic and paid search platforms to Microsoft and
migration of Yahoo!’s paid search advertisers and publishers is expected to take up to 24 months and will be
done on a market by market basis. The transition process will be complex and will require the expenditure of
significant time and resources by us. Delays or difficulties in, or disruptions and inconveniences caused by, the
transition process could result in the loss of advertisers, publishers, Affiliates, and employees, as well as, delays
in recognizing or reductions in the anticipated benefits of the transaction, any of which could negatively impact
our business and operating results.
Following the transition in each market, we will be relying on Microsoft as our exclusive platform technology
provider of algorithmic and paid search services. If Microsoft fails to perform as required under the Search
Agreement for any reason or suffers service level interruptions or other performance issues, we may not realize
the anticipated benefits of the Search Agreement and our search revenues could decline.
If we are unable to provide innovative search experiences and other services that generate significant traffic to
our Websites, our business could be harmed, causing our revenues to decline.
Internet search is characterized by rapidly changing technology, significant competition, evolving industry
standards, and frequent product and service enhancements. We must continually invest in improving our users’
search experience—including improving the relevance of our search results, as well as presenting users with a
search experience that is responsive to their needs and preferences—in order to continue to attract, retain, and
expand our user base and paid search advertiser base. We currently deploy our own technology to provide search
results on our network. Following implementation of our Search Agreement with Microsoft, Microsoft will
become our algorithmic and paid search platform technology provider, however, we will continue to need to
invest and innovate to improve our users’ search experience.
We also generate advertising revenue through other online services, such as Yahoo! Mail. If we are unable to
provide innovative search and other services which generate significant traffic to our Websites, our business
could be harmed, causing our revenues to decline.
We rely on the value of our brands, and a failure to maintain or enhance the Yahoo! brands in a cost-effective
manner could harm our operating results.
We believe that maintaining and enhancing our brands is an important aspect of our efforts to attract and expand
our user, advertiser, and Affiliate base. We also believe that the importance of brand recognition will increase
due to the relatively low barriers to entry in the Internet market. We have spent considerable money and
resources to date on the establishment and maintenance of our brands, and we anticipate spending increasing
amounts of money on, and devoting greater resources to, advertising, marketing, and other brand-building efforts
to preserve and enhance consumer awareness of our brands. Our brands may be negatively impacted by a number
of factors, including among other issues: service outages; product malfunctions; data privacy and security issues;
exploitation of our trademarks by others without permission; and poor presentation or integration of our search
marketing listings by Affiliates on their sites or in their software and services.
Further, while we attempt to ensure that the quality of our brand is maintained by our licensees, our licensees
might take actions that could impair the value of our brand, our proprietary rights, or the reputation of our
products and media properties. If we are unable to maintain or enhance customer awareness of, and trust in, our
brands in a cost-effective manner, or if we incur excessive expenses in these efforts, our business, operating
results and financial condition could be harmed.
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