eBay 2001 Annual Report Download - page 45

Should these or any other investigations lead to civil or criminal charges against us, we would likely
be harmed by negative publicity, the costs of litigation, the diversion of management time and other
negative eÅects, even if we ultimately prevail. Our business would suÅer if we were not to prevail in any
actions like these. Even the process of providing records and information can be expensive, time
consuming and result in the diversion of management attention.
A large number of transactions occur on our websites. We believe that government regulators have
received a substantial number of consumer complaints about us, which, while small as a percentage of our
total transactions, are large in aggregate numbers. As a result, we have from time to time been contacted
by various foreign, federal, state and local regulatory agencies and been told that they have questions with
respect to the adequacy of the steps we take to protect our users from fraud. We are likely to receive
additional inquiries from regulatory agencies in the future, which may lead to action against us. We have
responded to all inquiries from regulatory agencies by describing our current and planned antifraud eÅorts.
If one or more of these agencies is not satisÑed with our response to current or future inquiries, the
resultant investigations and potential Ñnes or other penalties could harm our business.
We are subject to laws relating to the use and transfer of personally identiÑable information about our
users and their transfers, especially outside of the U.S. Violation of these laws, which in many cases apply
not only to third-party transfers but also to transfers of information between ourselves and our subsidiaries,
and between ourselves, our subsidiaries and our commercial partners could subject us to signiÑcant
penalties and negative publicity and could adversely aÅect our company.
Third parties or governmental agencies may view our behavior as anti-competitive.
Third parties have in the past and may in the future allege that actions taken by us violate the
antitrust or competition laws of the U.S. or other countries, or otherwise constitute unfair competition.
Such claims typically are very expensive to defend, involve negative publicity and diversion of management
time and eÅort and could result in signiÑcant judgments against us, all of which would adversely aÅect us.
We have provided information to the Antitrust Division of the Department of Justice in connection
with an inquiry into our conduct with respect to ""auction aggregators'' including our licensing program and
a previously settled lawsuit against Bidder's Edge. Although the Antitrust Division has closed this inquiry,
if the Department of Justice or any other antitrust agency were to open other investigations of our
activities, 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 speciÑc 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, either with respect to our services in general, or in
order to sell certain types of goods (e.g., real estate, boats, automobiles, etc.). 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. Regulatory and licensure 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
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