Yahoo 2011 Annual Report Download - page 29

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Framework Agreement due to risks and uncertainties including: the failure of Alipay to generate significant
royalty and software technology services fees payable to Alibaba Group; the possibility that a liquidity event of
Alipay does not occur; the failure or inability of IPCo to pay its promissory note in accordance with its terms;
and uncertainties concerning the laws and regulations of the People’s Republic of China (the “PRC”) and the
PRC regulatory environment.
We and certain officers, directors and third parties are party to a number of stockholder derivative suits and
purported stockholder class action suits filed since we filed our Report on Form 10-Q for the quarter ended
March 31, 2011 with the Securities and Exchange Commission. See the section captioned “Contingencies”
included in Note 12—“Commitments and Contingencies” in the Notes to the consolidated financial statements.
Such claims and proceedings are inherently uncertain and their results cannot be predicted with certainty.
Regardless of the outcome, such legal proceedings can have an adverse impact on us because of legal costs,
diversion of management resources, and other factors. These lawsuits or any future lawsuits may become time
consuming and expensive and may result in adverse outcomes.
New technologies could block our advertisements, impair our ability to serve interest-based advertising, or
shift the location in which search results appear, which could harm our operating results.
Technologies have been developed and are likely to continue to be developed that can block display, search, and
interest-based advertising, or shift the location in which search results appear on pages so that our advertisements
do not appear in the most monetizable places on our pages or are obscured. Most of our revenue is derived from
fees paid by advertisers in connection with the display of graphical advertisements or clicks on search
advertisements on Web pages. As a result, such technologies and tools could reduce the number of display and
search advertisements that we are able to deliver or our ability to serve our interest-based advertising and this, in
turn, could reduce our advertising revenue and operating results.
Proprietary document formats may limit the effectiveness of our search technology by preventing our
technology from accessing the content of documents in such formats, which could limit the effectiveness of
our products and services.
A large amount of information on the Internet is provided in proprietary document formats. These proprietary
document formats may limit the effectiveness of search technology by preventing the technology from accessing
the content of such documents. The providers of the software applications used to create these documents could
engineer the document format to prevent or interfere with the process of indexing the document contents with
search technology. This would mean that the document contents would not be included in search results even if
the contents were directly relevant to a search. The software providers may also seek to require us to pay them
royalties in exchange for giving us the ability to search documents in their format. If the search platform
technology we employ is unable to index proprietary format Web documents as effectively as our competitors’
technology, usage of our search services might decline, which could cause our revenue to fall.
Interruptions, delays, or failures in the provision of our services could harm our operating results.
Delays or disruptions to our service, or the loss or compromise of data, could result from a variety of causes,
including the following:
• Our operations are susceptible to outages and interruptions due to fire, flood, earthquake, tsunami, other
natural disasters, power loss, equipment or telecommunications failures, cyber attacks, terrorist attacks,
political or social unrest, and other events over which we have little or no control.
• The systems through which we provide our products and services are highly technical, complex, and
interdependent. Design errors might exist in these systems, or might be introduced as we roll out
improvements and upgrades, which might cause service malfunctions or require services to be taken offline
while corrective responses are developed.
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