Yahoo 2015 Annual Report Download - page 22

governments to allow for certainty regarding transfers of data. However, given the preliminary nature
of the agreement, some uncertainty remains, and compliance obligations could cause us to incur
additional costs, require us to change business practices in a manner adverse to our business, or
affect the manner in which we provide our services.
The interpretation and application of privacy, data protection, data transfer and data retention laws
and regulations are often uncertain and in flux in the U.S. and internationally. These laws may be
interpreted and applied inconsistently from country to country and inconsistently with our current
policies and practices, complicating long-range business planning decisions. If privacy, data
protection, data transfer or data retention laws are interpreted and applied in a manner that is
inconsistent with our current policies and practices we may be fined or ordered to change our
business practices in a manner that adversely impacts our operating results. Complying with these
varying international requirements could cause us to incur substantial costs or require us to change
our business practices in a manner adverse to our business and operating results.
If our security measures are breached, our products and services may be perceived as not being
secure, users and customers may curtail or stop using our products and services, and we may incur
significant legal and financial exposure.
Our products and services involve the storage and transmission of Yahoo’s users’ and customers’
personal and proprietary information in our facilities and on our equipment, networks and corporate
systems. Security breaches expose us to a risk of loss of this information, litigation, remediation costs,
increased costs for security measures, loss of revenue, damage to our reputation, and potential
liability. Outside parties may attempt to fraudulently induce employees, users, or customers to
disclose sensitive information to gain access to our data or our users’ or customers’ data. In addition,
hardware, software or applications we procure from third parties may contain defects in design or
manufacture or other problems that could unexpectedly compromise network and data security.
Additionally, some third parties, such as our distribution partners, service providers and vendors, and
app developers, may receive or store information provided by us or by our users through
applications integrated with Yahoo. If these third parties fail to adopt or adhere to adequate data
security practices, or in the event of a breach of their networks, our data or our users’ data may be
improperly accessed, used or disclosed. Security breaches or unauthorized access have resulted in
and may in the future result in a combination of significant legal and financial exposure, increased
remediation and other costs, damage to our reputation and a loss of confidence in the security of our
products, services and networks that could have an adverse effect on our business. We take steps to
prevent unauthorized access to our corporate systems, however, because the techniques used to
obtain unauthorized access, disable or degrade service, or sabotage systems change frequently or
may be designed to remain dormant until a triggering event, we may be unable to anticipate these
techniques or implement adequate preventative measures. If an actual or perceived breach of our
security occurs, the market perception of the effectiveness of our security measures could be harmed
and we could lose users and customers.
If we are unable to attract, sustain, and renew distribution arrangements on favorable terms, our
revenue may decline.
We enter into distribution arrangements with third parties to promote or supply our services to their
users. For example:
• We maintain search and display advertising relationships with Affiliate sites, which integrate our
advertising offerings into their websites.
• We enter into distribution alliances with Internet service providers (including providers of cable
and broadband Internet access) and software distributors to promote our services to their users.
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