eBay 2011 Annual Report Download - page 41

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. Some jurisdictions prohibit the resale of event tickets at prices above the face value of the tickets or at all, or
highly regulate the resale of tickets, and new laws and regulations or changes to existing laws and regulations imposing these or other restrictions
may be adopted that could limit or inhibit our ability to operate, or our users' ability to continue to use, our tickets business. For example, the
unauthorized resale of football (soccer) tickets is illegal in the U.K., where we recently launched our StubHub site. 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. In October 2007, two plaintiffs filed a purported class action
lawsuit in North Carolina Superior Court alleging that StubHub sold (and facilitated and participated in the sale) of concert tickets to plaintiffs
with the knowledge that the tickets were resold in violation of North Carolina's maximum ticket resale price law (which has been subsequently
amended). In February 2011, the trial court granted plaintiffs' motion for summary judgment, concluding that immunity under the
Communications Decency Act did not apply. The trial court further held that StubHub violated the North Carolina unfair and deceptive trade
practices statute as it pertains to the two named plaintiffs, and certified its decision for immediate appeal to the North Carolina Court of Appeals.
StubHub has appealed this decision.
Some event organizers and professional sports teams have expressed concern about the resale of their event tickets on our sites. Suits
alleging a variety of causes of actions have in the past, and may in the future, be filed against StubHub and eBay by venue owners, competitors,
ticket buyers and unsuccessful ticket buyers. Such litigation could result in damage awards, could require us to change our business practices in
ways that may be harmful to our business, or could otherwise negatively affect our tickets business.
Our tickets business is subject to seasonal fluctuations and the general economic and business conditions that impact the sporting events and
live entertainment industries. The economic downturn resulted in a decrease in ticket prices sold on our sites and negatively impacted revenue and
profits. In addition, a work stoppage, strike or lockout by a professional sports league (for example, the recently ended National Basketball
Association lockout) that results in the cancellation of all or a portion of the games in a league's season would harm our tickets business. In
addition, a portion of the tickets inventory sold by sellers on StubHub is held by StubHub in digital form. Systems failures, security breaches, theft
or other disruptions that result in the loss of such tickets inventory could materially harm our tickets business.
Our tickets business also faces significant competition from a number of sources, including ticketing service companies (such as Live
Nation Entertainment (formerly Ticketmaster), AEG, Comcast
-Spectacor 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 is owned by Live Nation Entertainment) and
RazorGator. In addition, some ticketing service companies and event organizers have begun to issue event tickets through various forms of
electronic ticketing systems that are designed to restrict or prohibit the transferability of such event tickets. Ticketing service companies have also
begun to use market-based pricing strategies or dynamic pricing to charge much higher prices than they historically have for premium tickets.
Besides charging higher prices, these ticketing service companies have also imposed additional restrictions on transferability for these types of
tickets, such as requiring customers to pick up these tickets at will-call with the purchasing credit card. To the extent that event tickets issued in
this manner cannot be resold on our websites, or to the extent that we are otherwise unable to compete with these competitors, our tickets business
would be harmed. Pursuant to commercial arrangements, StubHub provides certain of its partners with integrated resale transactions, which
consumers may prefer due to, among other factors, almost instant delivery and lower fraud concerns. These integrations are largely deal-
dependent, and these arrangements may not be renewed on favorable terms, or at all.
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. We do not have long-term employment agreements with any of our key personnel and do not maintain any “key person”
life insurance policies, and some 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. We are currently seeking to
fill the position of President, PayPal on our senior management team, as well as other key management positions at PayPal.
Our businesses all depend on attracting and retaining key personnel. Our future success 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
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