eBay 2011 Annual Report Download - page 43

filed in the U.S. District Court in the Northern District of California. These lawsuits contain allegations that PayPal improperly held users' funds
or otherwise improperly limited user's accounts. These lawsuits seek damages as well as changes to PayPal's practices among other remedies. A
determination that there have been violations of laws relating to PayPal's practices could expose PayPal to significant liability. Any changes to
PayPal's practices resulting from these lawsuits could require PayPal to incur significant costs and to expend product resources, which could delay
other planned product launches or improvements and further harm our business. 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, losses
could be incurred and its operating margins may decrease.
Our industries are intensely competitive.
Marketplaces
Our Marketplaces businesses currently or potentially compete with a large number of companies providing particular categories of goods
and/or 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 can be 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 nominal cost using
commercially available software or partnering with any one of a number of successful ecommerce companies. Moreover, online and offline
businesses increasingly are competing with each other. Consumers who purchase or sell goods and services through our Marketplaces businesses
have more and more alternatives.
Our competitors include the vast majority of traditional department, warehouse, discount and general merchandise stores (as well as the
online operations of these traditional retailers), online retailers, online classified services and other shopping channels such as offline and online
home shopping networks. In the U.S., these include Wal-Mart, Target, Sears, Macy's, JC Penney, Costco, Office Depot, Staples, OfficeMax,
Sam's Club, Amazon.com (which continues to expand into new geographies and lines of business), Buy.com (owned by Rakuten), AOL.com,
Yahoo! Shopping, MSN, QVC and Home Shopping Network, among others.
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 minority equity stake), Google Merchant Center, Oodle.com and
a number of international websites operated by Schibsted ASA. In certain markets, our fixed-price listing and traditional auction-style listing
formats are increasingly being challenged by other formats, such as classifieds. Our classifieds websites, including Den Blå Avis, BilBasen, eBay
Classifieds (including eBay Anuncios, eBay Kleinanzeigen and eBay Annunci), Gumtree, Kijiji, LoQUo, Marktplaats.nl, mobile.de, Alamaula and
Rent.com, 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.
Our online shopping comparison site, Shopping.com, competes with sites such as Bing Shopping, Buy.com, Google 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 limit variation 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 Bing, Google and Yahoo!. We use product search engines and paid search advertising
to help users find 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 “Consumer Electronics, Computers, Cell Phones, Digital
Imaging and Video Games” categories include, among others, Abt Electronics, Amazon.com, Apple, B&H Photo, Best Buy, Buy.com, CNET,
Computer Discount Warehouse, Crutchfield, Dell, Electronics Boutique, Fry's Electronics, Gamestop, Hewlett Packard, J&R Music and Computer
World, Lenovo, MicroWarehouse, Overstock.com, PC Connection, PCMall.com, Radio Shack, Ritz Camera, Sony, Tech Depot, Tiger Direct,
uBid, major wireless carriers, and a variety of online and offline computer, consumer electronics, photography and video game retailers.
Our international Marketplaces websites compete with similar online and offline channels in each of their vertical categories in most
countries. In addition, they compete with general online ecommerce sites such as: Amazon, Quelle and Otto in Germany; Leboncoin.fr and
PriceMinister (owned by Rakuten) in France; Taobao in China; Tradus (owned by Naspers) in Poland; Yahoo-Kimo in Taiwan; Lotte, Naver and
11th Street in South Korea; Trading Post, OZtion and Aussie Bidder in Australia; and Amazon and Play.com (owned by Rakuten) in the United
Kingdom and other countries. In some of these
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