eBay 2000 Annual Report Download - page 42

recently settled lawsuit against Bidder's Edge. Should the division decide to take action against us, we would
likely be harmed by negative publicity, the costs of the action, possible private antitrust lawsuits, the diversion
of management time and eÅort and penalties we might suÅer if we ultimately were not to prevail.
Some of our businesses are subject to regulation and others may be in the future
Both ButterÑelds and Kruse are subject to regulation in some jurisdictions governing the manner in which
live auctions are conducted. Both are required to obtain licenses in these jurisdictions with respect to their
business or to permit the sale of categories of items (e.g. wine, automobiles and real estate). These licenses
generally must be renewed regularly and are subject to revocation for violation of law, violation of the
regulations governing auctions in general or the sale of the particular item and other events. If either company
was unable to renew a license or had a license revoked, its business would be harmed. In addition, changes to
the regulations or the licensure requirements could increase the complexity and the cost of doing auctions,
thereby harming us.
As our activities and the types of goods listed on our site expand, state regulatory agencies may claim that
we are subject to licensure in their jurisdiction. These claims could result in costly litigation or could require us
to change our manner of doing business in ways that increase our costs or reduce our revenues or force us to
prohibit listings of certain items. We could also be subject to Ñnes or other penalties. Any of these outcomes
could harm our business.
As we have expanded internationally, we have become subject to new regulations, including regulations
on the transmission of personal information. These laws may require costly changes to our business practices.
If we are found to have violated any of these laws, we could be subject to Ñnes or penalties, and our business
could be harmed.
Companies that handle payments, including our subsidiaries Billpoint and Half.com may be subject to
additional regulation
The Half.com business model involves the handling of payments by buyers for the items listed by
Half.com's sellers. Internet Auction Company, Ltd. also has a business model involving the handling of
payments by buyers. Billpoint handles its customer funds as a provider of Internet payment solutions.
Businesses that handle consumers' funds are subject to numerous regulations, including those related to
banking, credit cards, escrow, fair credit reporting and others. Billpoint is a new business with a relatively novel
approach to facilitating payments. It is not yet known how regulatory agencies will treat Billpoint. The cost
and complexity of Billpoint's business may increase if certain regulations are deemed to apply to its business.
In addition to the need to comply with these regulations, Billpoint's business is also subject to risks of fraud,
the need to grow systems and processes rapidly if its products are well received, a high level of competition,
including larger and better Ñnanced competitors and the need to coordinate systems and policies among itself,
us and Wells Fargo Bank, which is the provider of payment services. Similarly, Half.com may be subject to
certain regulations regarding payments and the cost and complexity of its business may increase if these
regulations are deemed to apply to its business.
We are subject to risks associated with information disseminated through our service
The law relating to the liability of online services companies for information carried on or disseminated
through their services is currently unsettled. Claims could be made against online services companies under
both United States and foreign law for defamation, libel, invasion of privacy, negligence, copyright or
trademark infringement, or other theories based on the nature and content of the materials disseminated
through their services. Several private lawsuits seeking to impose liability upon us have brought against us. In
addition, federal, state and foreign legislation has been proposed that imposes liability for or prohibits the
transmission over the Internet of certain types of information. Our service features a Feedback Forum, which
includes information from users regarding other users. Although all such feedback is generated by users and
not by us, it is possible that a claim of defamation or other injury could be made against us for content posted
in the Feedback Forum. Claims like these become more likely and have a higher probability of success in
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