eBay 2001 Annual Report Download - page 18

majority of these laws were adopted prior to the advent of the Internet and related technologies and, as a
result, do not contemplate or address the unique issues of the Internet and related technologies. Those
laws that do reference the Internet, such as the Digital Millennium Copyright Act, are only beginning to
be interpreted by the courts and their applicability and reach are therefore uncertain. In addition,
numerous states, including the State of California, where our headquarters is located, have regulations
regarding how ""auctions'' may be conducted and the liability of ""auctioneers'' in conducting such auctions.
No Ñnal legal determination has been made with respect to the applicability of the California regulations
to our business to date and little precedent exists in this area. Several states are considering imposing these
regulations upon us or our users, which could harm our business. We are currently subject to potential
regulation under the OÇce of Banks and Real Estate, or OBRE, in Illinois concerning the applicability of
the Illinois Auction law to our services. We are working with OBRE to determine the scope of its
regulatory eÅorts. In addition, as the nature of the products listed by our users change, we may become
subject to new regulatory restrictions, such as licensure as an auto dealer or real estate broker.
Several states have proposed legislation that would limit the uses of personal user information
gathered online or require online services to establish privacy policies. The Federal Trade Commission has
also settled several proceedings regarding the manner in which personal information is collected from users
and provided to third parties. Changes to existing laws or the passage of new laws intended to address
these issues could directly aÅect the way we do business or could create uncertainty on the Internet. This
uncertainty could reduce demand for our services, increase the cost of doing business as a result of
litigation costs or increased service delivery costs or otherwise harm our business. In addition, because our
services are accessible worldwide, and we facilitate sales of goods to users worldwide, foreign jurisdictions
may claim that we are required to comply with their laws. For example, a French court has ruled that a
U.S. website must comply with French laws regarding content. As we have expanded our international
activities, we have become obligated to comply with the laws of the countries in which we operate. Laws
regulating Internet companies outside of the United States are in many cases less favorable then those in
the U.S., giving greater rights to consumers, content owners and users or placing more extensive
restrictions on our operations then exist in the U.S. Compliance may be more costly or may require us to
change our business practices or restrict our service oÅerings relative to those in the U.S. Our failure to
comply with foreign laws could subject us to penalties ranging from Ñnes to bans on our ability to oÅer our
services. See ""Risk Factors Ì There are many risks associated with our international operations.''
Employees
As of December 31, 2001, we had approximately 2,560 full-time employees. Our future is
substantially dependent on the performance of our executive and senior management and key technical
personnel, and our continuing ability to Ñnd and retain highly qualiÑed technical and managerial personnel.
See ""Risk Factors Ì We are dependent on key personnel.''
ITEM 2: PROPERTIES
On March 1, 2000, we entered into a Ñve-year lease for general oÇce facilities located in San Jose,
California. This Ñve-year lease is commonly referred to as a synthetic lease because it represents a form of
oÅ-balance sheet Ñnancing under which an unrelated third-party funds 100% of the costs of the acquisition
of the property and leases the asset to us as lessee. Under our lease structure, upon termination or
expiration, at our option, we must either purchase the property from the lessor for a predetermined amount
or sell the real property to a third-party.
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