eBay 2012 Annual Report Download - page 40

It may take us longer than expected to fully realize the anticipated benefits, such as increased revenue and enhanced efficiencies, of any or
all of our acquisitions, and those benefits may ultimately be smaller than anticipated or may not be realized at all, which could adversely affect
our business and operating results. Future acquisitions may also require us to issue additional equity securities, spend our cash, or incur debt (and
increased interest expense), liabilities and amortization expenses related to intangible assets or write-offs of goodwill, which could adversely
affect our results of operations and dilute the economic and voting rights of our stockholders.
In addition, we have made certain investments, including through joint ventures, in which we have a minority equity interest and lack
management and operational control. The controlling joint venture partner in a joint venture investment may have business interests, strategies or
goals that are inconsistent with ours, and business decisions or other actions or omissions of the controlling joint venture partner or the joint
venture company may result in harm to our reputation or adversely affect the value of our investment in the joint venture. Our strategic
investments may expose us to additional risks. For example, GSI's minority interest in Intershop Communications AG is governed by German
law, which could subject us to liability for certain disadvantages to Intershop if we were deemed to be in control of Intershop under German law.
We have also been sued by craigslist, which has alleged that we improperly misused confidential information from craigslist that we received as
a minority investor. The complaint alleges breach of contract, breach of fiduciary duty, fraud, unfair competition and false advertising and seeks
compensatory and punitive damages, rescission and other relief.
Our ownership of GSI Commerce, Inc. exposes us to additional risks.
Our GSI business faces certain risks and challenges not shared by our other businesses, including those described under the risk factor
captions “If our GSI business is unable to enhance its platform and migrate clients to its new platform in a timely and cost-effective manner, it
would be substantially harmed” and “Changes in regulations or user concerns regarding privacy and protection of user data could adversely
affect our business.”
Competition for GSI's existing and potential clients is intense, and our GSI business may not be able to add new clients or keep existing
clients on favorable terms, or at all. For example, a change in the management of a GSI client could adversely affect our relationship with that
client. In addition, many of GSI's client contracts contain service level commitments. If our GSI business is unable to meet these commitments,
its relationships with its clients could be damaged, and client rights to terminate their contracts with GSI and/or financial penalty provisions
payable by GSI may be triggered. If any existing GSI clients (in particular, the large merchants and brands that GSI serves) were to exit the
business we provide services to, be acquired, declare bankruptcy, suffer other financial difficulties, fail to pay amounts owed to GSI and/or
terminate or modify their relationships with GSI in a manner unfavorable to us, our GSI business could be adversely affected.
A portion of GSI's ecommerce services revenue is derived from the value of ecommerce transactions that flow through GSI's ecommerce
services business. Accordingly, growth in GSI's ecommerce services revenue depends upon the continued growth of the online businesses of its
clients. GSI's ecommerce services business may be substantially impacted by any adverse conditions in the offline businesses of a GSI client that
negatively impact that client's online businesses. Any impairment of the offline business of GSI clients, whether due to financial difficulties,
impairment of client brands, reduction in marketing efforts, reduction in the number of client retail stores or otherwise, could negatively affect
consumer traffic and sales through GSI's clients' websites, which would result in lower revenues generated by our GSI business. Our GSI
business also relies on its clients' ability to accurately forecast product demand and select and buy the inventory for their corresponding online
businesses. Under such arrangements, the client establishes product prices and pays GSI service fees based either on a fixed or variable
percentage of revenues, or on the activity performed. As a result, if GSI's clients fail to accurately forecast product demand or optimize or
maintain access to inventory, the client's ecommerce business (and, in turn, GSI's service fees) could be adversely affected.
Our GSI business holds some inventory on behalf of its ecommerce services customers. If GSI is unable to effectively manage and handle
this inventory, this may result in unexpected costs that could adversely affect our GSI business. Any theft of such inventory, or damage or
interruption to such inventory, including as a result of earthquakes, hurricanes, floods, fire, power loss, labor disputes, terrorist attacks and
similar events and disruptions, could result in losses related to such inventory and disruptions to GSI's customers' businesses, which could in turn
adversely affect our GSI business.
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• for investments in which an investee's results of operations and financial condition are incorporated into our financial statements,
either in full or in part, the dependence on the investee's accounting, financial reporting and similar systems, controls and processes.