eBay 2009 Annual Report Download - page 47

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temporarily restrict the ability of customers to withdraw their funds if those funds or the customer’s account
activity are identified by PayPal’s risk models as suspicious. PayPal has in the past received negative publicity
with respect to its customer support and account restrictions, and has been the subject of purported class action
lawsuits and state attorney general inquiries alleging, among other things, failure to resolve account restrictions
promptly. If PayPal is unable to provide quality customer support operations in a cost-effective manner, PayPal’s
users may have negative experiences, PayPal may receive additional negative publicity, its ability to attract new
customers may be damaged, and it could become subject to additional litigation. As a result, current and future
revenues could suffer, and its operating margins may decrease. In addition, negative publicity about, or negative
experiences with, customer support for any of our businesses could cause our reputation to suffer or affect
consumer confidence in our brands as a whole.
Our industry is intensely competitive, and other companies or governmental agencies may allege that our
behavior is anti-competitive.
Marketplaces
Marketplaces businesses currently or potentially compete with a number of companies providing both
particular categories of goods and broader ranges of goods. The Internet provides new, rapidly evolving and
intensely competitive channels for the sale of all types of goods. We expect competition to intensify in the future.
The barriers to entry into these channels are relatively low and current offline and new competitors, including
small businesses who want to create and promote their own stores, can easily launch online sites at a nominal
cost using commercially available software or partnering with any one of a number of successful ecommerce
companies.
Our broad-based competitors include the vast majority of traditional department, warehouse, discount, and
general merchandise stores (as well as the online operations of these traditional retailers), emerging online
retailers, online classified services, and other shopping channels such as offline and online home shopping
networks. Among others, these include: Wal-Mart, Target, Sears, Macy’s, JC Penney, Costco, Office Depot,
Staples, OfficeMax, Sam’s Club, Amazon.com, Buy.com, AOL.com, Yahoo! Shopping, MSN, QVC, and Home
Shopping Network.
A number of companies offer a variety of services that provide channels for buyers to find and buy items
from sellers of all sizes, including online aggregation and classifieds websites such as craigslist (in which we
own a noncontrolling equity stake), Google Base, Oodle.com and a number of International websites operated by
Schibsted ASA. Our classifieds websites, including Kijiji, Marktplaats, mobile.de, Gumtree, Den Blå Avis and
BilBasen offer classifieds listings in the U.S. and a variety of local international markets. In many markets in
which they operate, including in the U.S., our classified platforms compete against more established online and
offline classifieds platforms.
In 2005, we acquired Shopping.com Ltd., an online shopping comparison site. Shopping.com competes with
sites such as Buy.com, Google’s Product Search, Nextag.com, Pricegrabber.com, Shopzilla, and Yahoo! Product
Search, which offer shopping search engines that allow consumers to search the Internet for specified products.
Recent legal developments may affect the utility of shopping comparison sites if manufacturers begin requiring
more uniformity in product pricing. In addition, sellers are increasingly utilizing multiple sales channels,
including the acquisition of new customers by paying for search-related advertisements on search engine sites
such as Google and Yahoo!. We use product search engines and paid search advertising to channel users to our
sites, but these services also have the potential to divert users to other online shopping destinations.
We also compete with many local, regional, and national specialty retailers and exchanges in each of the
major categories of products offered on our site. For example, category-specific competitors to offerings in our
Business and Industrial category include: Alex Lyon, CAT Auctions, DoveBid, GoDove, GoIndustry,
GovLiquidation.com, Hilco, Ironplanet, JJ Kane, Liquidation.com, MachineryTrader.com, MachineTools.com,
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