Table of Contents
We rely on the Internet infrastructure, and its continued commercial viability, over which we have no control and the failure of which
could substantially undermine our business strategy.
Our success depends, in large part, on other companies maintaining the Internet system infrastructure. In particular, we rely on other
companies to maintain a reliable network backbone that provides adequate speed, data capacity and security and to develop products that
enable reliable Internet access and services. If the Internet continues to experience significant growth in the number of users, frequency of use
and amount of data transmitted, the Internet system infrastructure may be unable to support the demands placed on it, and the Internet's
performance or reliability may suffer as a result of this continued growth.
In addition, the Internet could lose its commercial viability as a form of media due to delays in the development or adoption of new
standards and protocols to process increased levels of Internet activity. Any such degradation of Internet performance or reliability could cause
advertisers to reduce their Internet expenditures; in recent months, in fact, advertisers have begun to attribute less value to advertising on the
Internet. Furthermore, any loss in the commercial viability of the Internet would have a significant negative impact on our merchant services. If
other companies do not develop the infrastructure or complementary products and services necessary to establish and maintain the Internet as a
viable commercial medium, or if the Internet does not become a viable commercial medium or platform for advertising, promotions and
electronic commerce our business could suffer.
Underdeveloped telecommunications and Internet infrastructure may limit the growth of the Internet overseas thereby limiting the
growth of our business.
Access to the Internet requires advanced telecommunications infrastructure. The telecommunications infrastructure in many parts of
Europe, the Asia Pacific region and Latin America is not as well developed as in the United States and is partly owned and operated by current
or former national monopoly telecommunications carriers or may be subject to a restrictive regulatory environment. The quality and continued
development of telecommunications infrastructure in Europe, the Asia Pacific region and Latin America will have a significant impact on our
ability to deliver our services and on the market use and acceptance of the Internet in general.
In addition, the recent growth in the use of the Internet has caused frequent periods of performance degradation, requiring the upgrade of
routers and switches, telecommunications links and other components forming the infrastructure of the Internet by Internet service providers
and other organizations with links to the Internet. Any perceived degradation in the performance of the Internet as a whole could undermine the
benefits of our services. The quality of our services is ultimately limited by and reliant upon the speed and reliability of Internet related
networks operated by third parties. Consequently, the emergence and growth of the market for our services is dependent on improvements
being made to the entire Internet infrastructure in Europe, the Asia Pacific region and Latin America.
Consolidation in our industry could lead to increased competition and loss of customers.
The Internet industry has experienced substantial consolidation. For example, AOL, which previously acquired Netscape, has merged with
Time Warner and Compaq has acquired ZIP2. We expect this consolidation to continue. These acquisitions could adversely affect our business
and results of operations in a number of ways, including:
companies from whom we acquire content could acquire or be acquired by one of our competitors and stop licensing content to us;
our customers could acquire or be acquired by one of our competitors and terminate their relationship with us; and
our customers could merge with other customers, which could reduce the size of our customer base.