eBay 1999 Annual Report Download - page 44

●community cohesion and interaction;
●system reliability;
●customer service;
●reliability of delivery and payment by users;
●brand recognition;
●website convenience and accessibility;
●level of service fees; and
●quality of search tools.
Some current and potential competitors have longer company operating histories, larger customer bases and
greater brand recognition in other business and Internet markets than we do. Some of these competitors also have
significantly greater financial, marketing, technical and other resources. Other online trading services may be
acquired by, receive investments from or enter into other commercial relationships with larger, well established
and well financed companies. As a result, some of our competitors with other revenue sources may be able to
devote more resources to marketing and promotional campaigns, adopt more aggressive pricing policies and
devote substantially more resources to website and systems development than we are able to. Increased
competition may result in reduced operating margins, loss of market share and diminished value of our brand.
Some of our competitors have offered services for free and others may do this as well. We may be unable to
compete successfully against current and future competitors.
In order to respond to changes in the competitive environment, we may, from time to time, make pricing,
service or marketing decisions or acquisitions that could harm our business. For example, we implemented an
insurance program that generally insures items up to a value of $200, with a $25 deductible, for users with a
non-negative feedback rating at no cost to the user. New technologies may increase the competitive pressures by
enabling our competitors to offer a lower cost service. Some Web-based applications that direct Internet traffic to
certain websites may channel users to trading services that compete with us.
Although we have established Internet traffic arrangements with several large online services and search
engine companies, these arrangements may not be renewed on commercially reasonable terms. Even if these
arrangements are renewed, they may not result in increased usage of our service. In addition, companies that
control access to transactions through network access or Web browsers could promote our competitors or charge
us substantial fees for inclusion.
The land-based auction business is intensely competitive. B&B competes with two larger and better known
auction companies, Sotheby’s Holdings, Inc. and Christie’s International plc, as well as numerous regional
auction companies. To the extent that these companies increase their focus on the middle market properties that
form the core of B&B’s business, its business may suffer. Kruse is subject to competition from numerous regional
competitors. In addition, competition with Internet based auctions may harm the land-based auction business.
Although Billpoint’s business is new, several new companies are beginning to enter this market and large
companies, including banks and credit card companies, may become competitors.
Our business is dependent on the development and maintenance of the Web infrastructure
The success of our service will depend largely on the development and maintenance of the Web
infrastructure. This includes maintenance of a reliable network backbone with the necessary speed, data capacity
and security, as well timely development of complementary products such as high speed modems, for providing
reliable Web access and services. Because global commerce and the online exchange of information is new and
evolving, we cannot predict whether the Web will prove to be a viable commercial marketplace in the long term.
The Web has experienced, and is likely to continue to experience, significant growth in the numbers of users and
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