Yahoo 2012 Annual Report Download - page 26

Item 1A. Risk Factors
We face significant competition for users, advertisers, publishers, developers, and distributors.
We face significant competition from integrated online media companies, social networking sites, traditional
print and broadcast media, 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, users’ online
time, and online advertising dollars.
In addition, several competitors offer products and services that directly compete for users with our offerings,
including e-mail, search, sports, news and finance. Similarly, the advertising networks operated by our
competitors or by other participants in the display marketplace offer advertising exchanges, ad networks, demand
side platforms, ad serving technologies, sponsored search offerings, and other services that directly compete for
advertisers with our 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 particular market segments,
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 or collaborate with each other, 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 local 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.
We generate the majority of our revenue from display and search advertising, 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, 2012, 81 percent of our total revenue came from display and search
advertising. Our ability to retain and grow display and search revenue depends upon:
• maintaining and growing our user base and popularity as an Internet destination site;
• maintaining the popularity of our existing products and introducing engaging new products;
• maintaining and expanding our advertiser base on PCs 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;
• successfully acquiring, investing in, and implementing new technologies and strategic partnerships;
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