eBay 2007 Annual Report Download - page 40

could cause us to lose existing customers, impair our ability to attract new customers, and harm our revenue and
growth.
Our tickets business is subject to regulatory, competitive, and other risks that could harm this business.
Our tickets business, which includes our StubHub business, is subject to numerous risks. Many jurisdictions
have laws and regulations covering the resale of event tickets, and some jurisdictions prohibit the resale of event
tickets at prices above the face value of the tickets. In addition, new laws and regulations may be passed that would
limit our or our users’ ability to continue this business. Regulatory agencies or courts may claim or hold that we are
responsible for ensuring that our users comply with these laws and regulations or that we or our users are either
subject to licensure or prohibited from reselling event tickets in their jurisdictions.
Some event organizers and professional sports teams have expressed concern about the resale of their event
tickets on our sites. In November 2006, the New England Patriots filed suit against StubHub alleging that StubHub’s
resale activities violate Massachusetts’ ticket resale laws and constitute intentional interference with the team’s
relationship with its season ticket holders. In April 2007, Ticketmaster filed suit against eBay d/b/a StubHub
alleging that StubHub had improperly interfered with Ticketmaster’s contracts with its clients by wrongfully
obtaining tickets for sale in violation of Ticketmaster’s exclusive contractual rights to sell such tickets. Such
litigation could result in damage awards, could require us to change our business practices in harmful ways, or could
otherwise negatively affect our tickets business. Our tickets business is also subject to seasonal fluctuations and the
general economic and business conditions that impact the sporting events and live entertainment industries. Our
tickets business also faces significant competition from a number of sources, including ticketing service companies
(such as TicketMaster and Tickets.com), event organizers (such as professional sports teams and leagues), ticket
brokers, and other online and offline ticket resellers, such as TicketsNow (which has entered into an agreement to be
acquired by TicketMaster) and RazorGator. If we are unable to effectively compete with these competitors, our
tickets business could be harmed.
We depend on key personnel.
Our future performance depends substantially on the continued services of our senior management and other
key personnel and our ability to retain and motivate them. In January 2008, we announced that Meg Whitman will
be resigning as our president and chief executive officer effective March 31, 2008, and that John Donahoe has been
named by our board of directors to succeed Ms. Whitman as our president and chief executive officer upon
Ms. Whitman’s resignation, as well as other significant changes in our executive management. These changes may
result in increased attrition of our personnel as new reporting relationships are established and as other companies
may increasingly target our executives. We do not have long-term employment agreements with any of our key
personnel, we do not maintain any “key person” life insurance policies, and many members of our senior
management team have fully vested the vast majority of their in-the-money equity incentives. The loss of the
services of any of our executive officers or other key employees could harm our business. Our new businesses all
depend on attracting and retaining key personnel. Our future success also will depend on our ability to attract, train,
retain and motivate highly skilled technical, managerial, marketing, and customer support personnel. Competition
for these personnel is intense, and we may be unable to successfully attract, integrate, or retain sufficiently qualified
personnel. In making employment decisions, particularly in the Internet and high-technology industries, job
candidates often consider the value of the equity awards they are to receive in connection with their employment.
Fluctuations in our stock price may make it more difficult to retain and motivate employees whose stock option
strike prices are substantially above current market prices. Similarly, decreases in the number of unvested in-the-
money stock options held by existing employees, whether because our stock price has declined, options have vested,
or because the size of follow-on option grants has declined, may make it more difficult to retain and motivate
employees.
Problems with or price increases by third parties who provide services to us or to our users could harm
our business.
A number of parties provide services to us or to our users that benefit us. Such services include seller tools that
automate and manage listings, merchant tools that manage listings and interface with inventory management
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