eBay 2015 Annual Report Download - page 27

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Such claims may be brought directly against us and/or against our customers whom we may indemnify
either because we are contractually obligated to do so or we choose to do so as a business matter. We believe that
an increasing number of these claims against us and other technology companies have been, and continue to be,
initiated by third parties whose sole or primary business is to assert such claims. In addition, we have seen
significant patent disputes between operating companies in some technology industries. Patent claims, whether
meritorious or not, are time-consuming and costly to defend and resolve, and could require us to make expensive
changes in our methods of doing business, enter into costly royalty or licensing agreements, make substantial
payments to satisfy adverse judgments or settle claims or proceedings, or cease conducting certain operations,
which would harm our business.
We are exposed to fluctuations in interest rates.
Some of our borrowings bear interest at floating rates and we have entered into agreements intended to
convert the interest rate on some of our fixed rate debt instruments to floating rates. To the extent that prevailing
rates increase, our interest expense under these debt instruments will increase.
Investments in both fixed-rate and floating-rate interest-earning instruments carry varying degrees of
interest rate risk. The fair market value of our fixed-rate investment securities may be adversely impacted due to
a rise in interest rates. In general, fixed-rate securities with longer maturities are subject to greater interest-rate
risk than those with shorter maturities. While floating rate securities generally are subject to less interest-rate risk
than fixed-rate securities, floating-rate securities may produce less income than expected if interest rates decrease
and may also suffer a decline in market value if interest rates increase. Due in part to these factors, our
investment income may decline or we may suffer losses in principal if securities are sold that have declined in
market value due to changes in interest rates. In addition, relatively low interest rates limit our investment
income. Fluctuations in interest rates that increase the cost of our current or future indebtedness, cause the market
value of our assets to decline or reduce our investment income could adversely affect our financial results.
Our tickets business is subject to regulatory, competitive and other risks that could harm this business.
Our tickets business, which includes StubHub, is subject to numerous risks, including:
• Some jurisdictions, in particular jurisdictions outside the United States, prohibit the resale of event
tickets (anti-scalping laws) 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 could limit or inhibit our ability to operate, or our users’ ability to continue to
use, our tickets business.
• Regulatory agencies or courts may claim or hold that we are responsible for ensuring that our users
comply with these laws and regulations.
• In many jurisdictions, our tickets business depends on commercial partnerships with event organizers
or licensed ticket vendors, which we must develop and maintain on acceptable terms for our tickets
business to be successful.
• Our tickets business is subject to seasonal fluctuations and the general economic and business
conditions that impact the sporting events and live entertainment industries.
• A portion of the tickets inventory sold by sellers on the StubHub platform is processed by StubHub in
digital form. Systems failures, security breaches, theft or other disruptions that result in the loss of such
sellers’ tickets inventory, could result in significant costs and a loss of consumer confidence in our
tickets business.
• Lawsuits 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
lawsuits could result in significant costs and require us to change our business practices in ways that
negatively affect our tickets business.
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