eBay 1999 Annual Report Download - page 46

●authentication and appraisal; and
●arrangements to facilitate shipment of products.
We may pursue strategic relationships with third parties to provide many of these services. By using third
parties to deliver these services, we may be unable to control the quality of these services and our ability to
address problems if any of these third parties fails to perform adequately will be reduced. Expanding our
operations in this manner also will require significant additional expenses and development, operations and other
resources and will strain our management, financial and operational resources. The lack of market acceptance of
any new services could harm our business.
Our growth will depend on our ability to develop our brand
We believe that our historical growth has been largely attributable to word of mouth. We have benefited
from frequent and high visibility media exposure both nationally and locally. We do not expect the frequency or
quality of this media exposure to continue. However, we believe that continuing to strengthen our brand will be
critical to achieving widespread acceptance of our service. Promoting and positioning our brand will depend
largely on the success of our marketing efforts and our ability to provide high quality services. In order to
promote our brand, we will need to increase our marketing budget and otherwise increase our financial
commitment to creating and maintaining brand loyalty among users. Brand promotion activities may not yield
increased revenues, and even if they do, any increased revenues may not offset the expenses we incurred in
building our brand. If we do attract new users to our service, they may not conduct transactions over our service
on a regular basis. If we fail to promote and maintain our brand or incur substantial expenses in an unsuccessful
attempt to promote and maintain our brand, our business would be harmed.
We may be unable to protect or enforce our intellectual property rights adequately
We regard the protection of our copyrights, service marks, trademarks, trade dress and trade secrets as
critical to our success. We rely on a combination of patent, copyright, trademark, service mark and trade secret
laws and contractual restrictions to protect our proprietary rights in products and services. We have entered into
confidentiality and invention assignment agreements with our employees and contractors, and nondisclosure
agreements with parties with which we conduct business in order to limit access to and disclosure of our
proprietary information. These contractual arrangements and the other steps taken by us to protect our intellectual
property may not prevent misappropriation of our technology or deter independent third-party development of
similar technologies. We pursue the registration of our trademarks and service marks in the U.S. and
internationally. Effective trademark, service mark, copyright and trade secret protection may not be available in
every country in which our services are made available online. We have licensed in the past, and expect to license
in the future, certain of our proprietary rights, such as trademarks or copyrighted material, to third parties. These
licensees may take actions that might diminish the value of our proprietary rights or harm our reputation. We
also rely on certain technologies that we license from third parties, such as Oracle Corporation, Microsoft and
Sun Microsystems Inc., the suppliers of key database technology, the operating system and specific hardware
components for our service. These third-party technology licenses may not continue to be available to us on
commercially reasonable terms. The loss of this technology could require us to obtain substitute technology of
lower quality or performance standards or at greater cost.
Our business is subject to consumer trends and discretionary consumer spending
We derive most of our revenues from fees received from sellers for listing products for sale on our service
and fees received from successfully completed transactions. Our future revenues will depend upon continued
demand for the types of goods that are listed by users of our service. The popularity of certain categories of
items, such as toys, dolls and memorabilia, among consumers may vary over time due to perceived scarcity,
subjective value, and societal and consumer trends in general. A decline in the popularity of, or demand for,
certain collectibles or other items sold through our service could reduce the overall volume of transactions on
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