Yahoo 2011 Annual Report Download - page 16

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!. We compete against these and other 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. We also compete with
social media and networking sites which are attracting a substantial and increasing share of users and users’
online time, and may continue to attract an increasing share of online advertising dollars.
In addition, several competitors offer products and services that directly compete for users with our offerings,
including consumer e-mail, local search, instant messaging, daily deals, photos, maps, video sharing, content
channels, mobile applications, and shopping. Similarly, the advertising networks operated by our competitors or
by other participants in the display marketplace offer services that directly compete with our offerings for
advertisers, including advertising exchanges, ad networks, demand side platforms, ad serving technologies and
sponsored search offerings. We also compete with traditional print and broadcast media companies to attract
domestic and international advertising spending. 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, technologies, 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
may be 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 twelve months ended December 31, 2011, 81 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;
• successfully implementing changes and improvements to our advertising management platforms and obtaining
the acceptance of our advertising management platforms by advertisers, Website publishers, and online
advertising networks;
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