Yahoo 2015 Annual Report Download - page 20

competitive with other search providers. If Microsoft fails to do this, our revenue and profitability
could decline and our ability to maintain and expand our relationships with Affiliates for search and
paid search advertising could be negatively impacted. Further, our competitors may continue to
increase revenue, profitability, and market share at a higher rate than we do.
The term of the Search Agreement is 10 years from its commencement date, February 23, 2010,
subject to earlier termination as provided in the Search Agreement. On or after October 1, 2015, either
the Company or Microsoft may terminate the Search Agreement by delivering a written notice of
termination to the other party. The Search Agreement will remain in effect for four months from the
date of a termination notice to provide for a transition period. If Microsoft terminated the Search
Agreement and the Company was unable to rely on its own services or the Services Agreement with
Google, the termination could have an adverse impact on our business, revenue and operating
results.
Risks associated with our Services Agreement with Google may adversely affect our business and
operating results.
Under our Services Agreement with Google, Google will provide us with search advertisements
through Google’s AdSense for Search service (“AFS”), web algorithmic search services through
Google’s Websearch Service, and image search services. We entered into the Services Agreement
with Google in the fourth quarter of 2015. We expect that our revenues under the Services
Agreement with Google will increase in 2016. In addition, if Microsoft were to terminate its Search
Agreement with us, we would be required to rely on the Services Agreement and our Yahoo Gemini
platform to replace the search revenue we currently receive under the Search Agreement.
We are dependent on Google continuing to invest and innovate to maintain and improve its
algorithmic and paid search services and to be competitive with other search providers. If Google
fails to do this, our revenue and profitability could decline. Further, Google has a number of
termination rights under the Services Agreement. If Google terminated the Services Agreement and
we were unable to rely on our Yahoo Gemini platform or the Search Agreement with Microsoft, the
termination could have an adverse impact on our business, revenue and operating results.
If we are unable to provide innovative search experiences and other products and services that
differentiate our services and 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. Although we have agreements
with Microsoft and Google to use their paid search platforms, we still need to continue to invest in
our Yahoo Gemini search platform and to innovate to improve our users’ search experience
(especially on mobile) to continue to differentiate our services and attract, retain, and expand our
user base and paid search advertiser base. We also generate revenue through other online products,
services and apps, and continue to innovate the products, services and apps in our portfolio. The
research and development of new, technologically advanced products is a complex process that
requires significant levels of innovation and investment, as well as accurate anticipation of
technology, market and consumer trends.
If we are unable to provide innovative search experiences and other products and services which
differentiate our services, gain user acceptance and generate significant traffic to our websites, or if
we are unable to effectively monetize the traffic from such products and services, our business could
be harmed, causing our revenue to decline.
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