Yahoo 2010 Annual Report Download - page 21

We may be subject to legal liability associated with providing online services.
We host a wide variety of services and technology products that enable individuals and businesses to exchange
information, upload or otherwise generate photos, videos, text, and other content; advertise products and
services; conduct business; and engage in various online activities both domestically and internationally. The law
relating to the liability of providers of these online services and products for activities of their users is currently
unsettled both within the U.S. and internationally. Claims have been threatened and have been brought against us
for defamation, negligence, breaches of contract, copyright or trademark infringement, unfair competition,
unlawful activity, tort, including personal injury, fraud, or other theories based on the nature and content of
information which we publish or to which we provide links or that may be posted online or generated by our
users. In addition, we have been and may again in the future be subject to domestic or international actions
alleging that the availability of certain content within our services violates laws in domestic and international
jurisdictions. Defense of any such actions could be costly and involve significant time and attention of our
management and other resources and may require us to change our business in an adverse manner.
We arrange for the distribution of third-party advertisements to third-party publishers and advertising networks,
and we offer third-party products, services, or content, such as stock quotes and trading information, under the
Yahoo! brand or via distribution on Yahoo! Properties. 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 may be disputed, could result in
substantial costs to enforce or defend, and depends on the financial resources of the other party to the agreement,
and any amounts received might not be adequate to cover our liabilities or the costs associated with defense of
such proceedings.
It is also possible that if the manner in which information is provided or any information provided directly by us
contains errors or is otherwise wrongfully 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, alleged
violations of policies or privacy protections, or interruptions or delays in e-mail service. We may also face
purported consumer class actions or state actions relating to our online services, including our fee-based services
(particularly in connection with any decision to discontinue a fee-based service). In addition, our customers, third
parties or government entities may assert claims or actions against us if our online services or technologies are
used to spread or facilitate malicious or harmful code or applications. Investigating and defending these types of
claims are expensive, even if the claims are without merit or do not ultimately result in liability, and could
subject us to significant monetary liability or cause a change in business practices that could negatively impact
our ability to compete.
Acquisitions and strategic investments could result in adverse impacts on our operations and in unanticipated
liabilities.
We have acquired, and have made strategic investments in, a number of companies (including through joint
ventures) in the past, and we expect to make additional acquisitions and strategic investments in the future. Such
transactions may result in dilutive issuances of our equity securities, use of our cash resources, and incurrence of
debt and amortization expenses related to intangible assets. Our acquisitions and strategic investments to date
were accompanied by a number of risks, including:
• the difficulty of assimilating the operations and personnel of our acquired companies into our operations;
• the potential disruption of our ongoing business and distraction of management;
• the incurrence of additional operating losses and expenses of the businesses we acquired or in which we
invested;
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