Yahoo 2010 Annual Report Download - page 15

Item 1A. Risk Factors
We face significant competition for users, advertisers, publishers, developers, and distributors.
We face significant competition from integrated online media companies as well as from social networking sites,
traditional print and broadcast media, general purpose and vertical search engines and various e-commerce sites.
In a number of international markets, especially those in Asia, Europe, the Middle East and Latin America, we
face substantial competition from local Internet service providers and other portals that offer search,
communications, and other commercial services.
Several of our competitors offer an integrated variety of Internet products, advertising services, technologies,
online services and content in a manner similar to Yahoo!. Among other areas, we compete against these
companies to attract and retain users, advertisers, developers, and third-party Website publishers as participants
in our Affiliate network, and to obtain agreements with third parties to promote or distribute our services.
In addition, several competitors offer products and services that directly compete for users with our offerings,
including consumer e-mail, local search, instant messaging, photos, maps, video sharing, content channels,
mobile applications, and shopping. Similarly, the advertising networks operated by our competitors offer services
that directly compete with our offerings for advertisers, including advertising exchanges, ad serving technologies
and sponsored search offerings. We also compete with traditional print and broadcast media companies to attract
advertising dollars, both domestically and internationally. We further compete for users, advertisers and
developers with social media and networking sites as well as the wide variety of other providers of online
services. Social networking sites in particular are attracting a substantial and increasing share of users and users’
online time, which could enable them to attract an increasing share of online advertising dollars.
Some of our existing competitors and possible entrants may have greater brand recognition for certain products
and services, more expertise in a particular segment of the market, and greater operational, strategic,
technological, financial, personnel, or other resources than we do. Many of our competitors have access to
considerable financial and technical resources with which to compete aggressively, including by funding future
growth and expansion and investing in acquisitions and research and development. Further, emerging start-ups
may be able to innovate and provide new products and services faster than we can. In addition, competitors may
consolidate with each other or collaborate, and new competitors may enter the market. Some of our competitors
in international markets have a substantial competitive advantage over us because they have dominant market
share in their territories, are owned by local telecommunications providers, have greater brand recognition, are
focused on a single market are more familiar with local tastes and preferences, or have greater regulatory and
operational flexibility due to the fact that we are subject to both U.S. and foreign regulatory requirements.
If our competitors are more successful than we are in developing and deploying compelling products or in
attracting and retaining users, advertisers, publishers, developers, or distributors, our revenue and growth rates
could decline.
The majority of our revenue is derived from display and search, and the reduction in spending by or loss of
current or potential advertisers would cause our revenue and operating results to decline.
For the year ended December 31, 2010, 84 percent of our total revenue came from display and search. Our ability
to continue to retain and grow display and search revenue depends upon:
• maintaining and growing our user base;
• maintaining and growing our popularity as an Internet destination site;
• maintaining and expanding our advertiser base on the Internet and mobile devices;
• broadening our relationships with advertisers to small- and medium-sized businesses;
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