eBay 2001 Annual Report Download - page 43

prevent these companies from providing services to our users could reduce the number of listings on our
websites and thereby harm our business.
Our failure to manage growth could harm us.
We currently are experiencing a period of expansion in our headcount, facilities and infrastructure,
and we anticipate that further expansion will be required to address potential growth in our customer base
and number of listings as well as our expansion into new geographic areas, types of goods and alternative
methods of sale. This expansion has placed, and we expect it will continue to place, a signiÑcant strain on
our management, operational and Ñnancial resources. The areas that are put under strain by our growth
include the following:
‚The Websites. We must constantly add new hardware, update software and add new engineering
personnel to accommodate the increased use of our and our subsidiaries' websites and the new
products and features we are regularly introducing. This upgrade process is expensive, and the
increased complexity of our websites increases the cost of additional enhancements. If we are
unable to increase the capacity of our systems at least as fast as the growth in demand for this
capacity, our websites may become unstable and may cease to operate for periods of time. We are
commencing a signiÑcant multiyear project to enhance our current technical architecture. If this
project is not successful, our business could be harmed. We have experienced periodic unscheduled
downtime. Continued unscheduled downtime would harm our business and also could anger users of
our websites and reduce future revenues.
‚Customer Support. We are expanding our customer support operations to accommodate the
increased number of users and transactions on our websites and the increased level of trust and
safety activity we provide worldwide. If we are unable to provide these operations in a cost-eÅective
manner, users of our websites may have negative experiences, and current and future revenues
could suÅer, or our operating margins may decrease.
‚Customer Accounts. Our revenues are dependent on prompt and accurate billing processes. If we
are unable to grow our transaction processing abilities to accommodate the increasing number of
transactions that must be billed, our ability to collect revenue will be harmed.
We must continue to hire, train and manage new employees at a rapid rate. If our new hires perform
poorly, or if we are unsuccessful in hiring, training, managing and integrating these new employees, or if
we are not successful in retaining our existing employees, our business may be harmed. To manage the
expected growth of our operations and personnel, we will need to improve our transaction processing,
operational and Ñnancial systems, procedures and controls. This is a special challenge as we acquire new
operations with diÅerent systems. Our current and planned personnel, systems, procedures and controls
may not be adequate to support our future operations. We may be unable to hire, train, retain and manage
required personnel or to identify and take advantage of existing and potential strategic relationships and
market opportunities.
Our business may be harmed by the listing or sale by our users of illegal items.
The law relating to the liability of providers of online services for the activities of their users on their
service is currently unsettled. We are aware that certain goods, such as Ñrearms, other weapons, adult
material, tobacco products, alcohol and other goods that may be subject to regulation by local, state or
federal authorities, have been listed and traded on our service. We may be unable to prevent the sale of
unlawful goods, or the sale of goods in an unlawful manner, by users of our service, and we may be subject
to allegations of civil or criminal liability for unlawful activities carried out by users through our service.
We have been subject to several lawsuits based upon such allegations. In order to reduce our exposure to
this liability, we have prohibited the listing of certain items and increased the number of personnel
reviewing questionable items. In the future, we may implement other protective measures that could
require us to spend substantial resources and/or to reduce revenues by discontinuing certain service
oÅerings. Any costs incurred as a result of liability or asserted liability relating to the sale of unlawful
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