Yahoo 2015 Annual Report Download - page 21

Our business depends on a strong brand, and failing to maintain or enhance the Yahoo brands in a
cost-effective manner could harm our operating results.
Maintaining and enhancing our brands is an important aspect of our efforts to attract and expand our
user, advertiser, and Affiliate base. We believe that the importance of brand recognition will increase
due to the relatively low barriers to entry in certain portions of the Internet market. Maintaining and
enhancing our brands will depend largely on our ability to provide high-quality, innovative products,
and services, which we might not do successfully. We have spent and expect to spend considerable
money and resources on the establishment and maintenance of our brands, as well as advertising,
marketing, and other brand-building efforts to preserve and enhance consumer awareness of our
brands. Our brands may be negatively impacted by a number of factors such as service outages,
product malfunctions, data protection and security issues, exploitation of our trademarks by others
without permission, and poor presentation or integration of our search marketing offerings by
Affiliates on their sites or in their software and services.
Further, while we attempt to ensure that the quality of our brands is maintained by our licensees, our
licensees might take actions that could impair the value of our brands, our proprietary rights, or the
reputation of our products and media properties. If we are unable to maintain or enhance our brands
in a cost-effective manner, or if we incur excessive expenses in these efforts, our business, operating
results and financial condition could be harmed.
Changes in regulations or user concerns regarding privacy and protection of user data, or any failure
to comply with such laws, could adversely affect our business.
Federal, state, and international laws and regulations govern the collection, use, retention, disclosure,
sharing and security of data that we receive from and about our users. The use of consumer data by
online service providers and advertising networks is a topic of active interest among federal, state,
and international regulatory bodies, and the regulatory environment is unsettled. Many states have
passed laws requiring notification to users where there is a security breach for personal data, such as
California’s Information Practices Act. We face similar risks in international markets where our
products, services and apps are offered. Any failure, or perceived failure, by us to comply with or
make effective modifications to our policies, or to comply with any federal, state, or international
privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory
principles could result in proceedings or actions against us by governmental entities or others, a loss
of user confidence, damage to the Yahoo brands, and a loss of users, advertising partners, or
Affiliates, any of which could potentially have an adverse effect on our business.
In addition, various federal, state and foreign legislative or regulatory bodies may enact new or
additional laws and regulations concerning privacy, data retention, data transfer and data protection
issues, including laws or regulations mandating disclosure to domestic or international law
enforcement bodies, which could adversely impact our business, our brand or our reputation with
users. For example, some countries are considering or have enacted laws mandating that user data
regarding users in their country be maintained in their country. Having to maintain local data centers
in individual countries could increase our operating costs significantly. In addition, there currently is a
data protection regulation pending final approval by the European Union that may include
operational requirements for companies that receive or process personal data that are different than
those currently in place in the European Union, and that may also include significant penalties for
non-compliance.
The European Court of Justice’s recent invalidation of the European Commission’s 2000 Safe Harbor
Decision has created uncertainty around certain international transfers of data from the European
Union to the U.S. A preliminary agreement has been reached between the U.S. and European Union
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