eBay 2000 Annual Report Download - page 49

‚ brand recognition.
With respect to our online competition, additional competitive factors are:
‚ community cohesion and interaction;
‚ system reliability;
‚ reliability of delivery and payment;
‚ 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 spaces than we do. Some of these competitors
also have signiÑcantly greater Ñnancial, 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-Ñnanced 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 oÅered 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 have
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 oÅer a lower cost service. Some Internet-based
applications that direct Internet traÇc to certain websites may channel users to trading services that compete
with us.
Although we have established Internet traÇc 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 Internet browsers could promote our competitors or
charge us substantial fees for inclusion.
The oÅ-line auction business is intensely competitive. ButterÑelds 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 ButterÑelds' business or in the western United States, its business may suÅer.
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 have entered this space, including competitors who are oÅering free services and signiÑcant
promotional incentives, and large companies, including banks and credit card companies, are also beginning to
enter this space. Half.com competes directly with online retailers in its product categories such as
Amazon.com which oÅers a directly competitive service, as well as with traditional sellers of used books,
videos and CDs.
Our business is dependent on the development and maintenance of the Internet infrastructure
The success of our service will depend largely on the development and maintenance of the Internet
infrastructure. This includes maintenance of a reliable network backbone with the necessary speed, data
capacity and security, as well as timely development of complementary products, for providing reliable
Internet access and services. The Internet has experienced, and is likely to continue to experience, signiÑcant
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