Yahoo 2010 Annual Report Download - page 17

in the fourth quarter of 2010, and we continue to transition algorithmic and paid search in other markets. 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.
If Microsoft fails to perform as required under the Search Agreement for any reason or suffers service level
interruptions or other performance issues, or if advertisers or users are less satisfied than expected with the
services provided or results obtained under the Search Agreement, we may not realize the anticipated benefits of
the Search Agreement, we may lose advertisers, publishers and Affiliates and our search revenue or our
profitability 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 revenue 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—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, except in markets where we
have transitioned to Microsoft’s platform. Even after we complete the transition to Microsoft’s platform in all
markets, we will need to continue to invest and innovate to improve our users’ search experience.
We also generate 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 revenue to decline.
If we are unable to license or acquire compelling content and services at reasonable cost or if we do not
develop or commission compelling content of our own, the number of users of our services may not grow as
anticipated, or may decline, or users’ level of engagement with our services may decline, all or any of which
could harm our operating results.
Our future success depends in part on our ability to aggregate compelling content and deliver that content
through our online properties. We license from third parties much of the content and services on our online
properties, such as news items, stock quotes, weather reports, music video, music radio, and maps. We believe
that users will increasingly demand high-quality content and services, including music videos, film clips, news
footage, and special productions. Such content and services may require us to make substantial payments to third
parties from whom we license or acquire such content or services. Our ability to maintain and build relationships
with such third-party providers is critical to our success. In addition, as new methods for accessing the Internet
become available, including through alternative devices, we may need to enter into amended agreements with
existing third-party providers to cover the new devices. We may be unable to enter into new, or preserve existing,
relationships with the third-parties whose content or services we seek to obtain. In addition, as competition for
compelling content increases both domestically and internationally, our third-party providers may increase the
prices at which they offer their content and services to us, and potential providers may not offer their content or
services to us at all, or may offer them on terms that are not agreeable to us. An increase in the prices charged to
us by third-party providers could harm our operating results and financial condition. Further, many of our content
and services licenses with third parties are non-exclusive. Accordingly, other media providers may be able to
offer similar or identical content. This increases the importance of our ability to deliver compelling editorial
content and personalization of this content for users in order to differentiate Yahoo! from other businesses. If we
are unable to license or acquire compelling content at reasonable prices, if other companies distribute content or
services that are similar to or the same as that provided by us, or if we do not develop compelling editorial
content or personalization services, the number of users of our services may not grow as anticipated, or may
decline, which could harm our operating results.
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