EBAY INC
For the period ended Dec 31, 2024. Filed Feb 27, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 27, 2025
EBAY$121.96-1.1%Stored close · as of Nov 6, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-28.
0001065088-24-000036
Item 1A. RISK FACTORSCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-27.
0001065088-25-000037
Item 1A. RISK FACTORSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 213 previous paragraphs and 236 current paragraphs.
113 unchanged; 85 reworded; 35 added; 14 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
•Cyberattacks and data security breaches and incidents could significantly damage our reputation, reduce our revenues, increase our costs, result in litigation and regulatory penalties, and otherwise harm our business.
Current report
We expect Gen AI to have a significant impact on the future of ecommerce, as AI technologies become increasingly important for consumers buying and selling goods online. If we are unable to identify popular Gen AI providers and AI technologies, or if we fail to utilize those technologies or develop our own technologies, our business may be harmed. For example, consumers may increasingly search for products using chatbots, virtual assistants or other Gen AI technologies powered by large language models instead of using traditional search engines. If current and future AI technologies do not send referrals to eBay at the rate of traditional search engines for any reason, the amount of buyer and seller traffic using our platforms could decrease, which could negatively impact on our business and results of operations.
Current report
Although eBay has global reach, there are ecommerce businesses in many locations that have larger local customer bases or greater brand recognition than we do in those locations and markets. Regardless of their size or brand recognition, local competitors may have a better understanding of local culture and commerce and be better positioned to quickly and effectively deliver the experiences that these local consumers want, which could drive down consumer traffic to our Marketplace platforms and harm our business. We expect to increasingly compete with local competitors in developing countries that have these or other unique advantages, such as a greater familiarity with, and ability to operate efficiently under, local regulatory authorities.
Current report
Our business is designed to appeal broadly to a diverse global community of buyers and sellers. In recent years, our growth strategy has increasingly emphasized certain specialized categories that we call Focus Categories. Examples of these Focus Categories include motor parts and accessories, collectibles, refurbished goods, and authenticated luxury items. However, buyers and sellers in our Focus Categories often have unique product and service needs. We devote substantial time and resources to ensuring that we provide the platform experiences that our focus category consumers and consumers broadly want. In doing so, we compete with smaller, specialized ecommerce sites that cater to the buyers and sellers in these product categories. Because of the size and complexity of our Marketplace platforms, we may fail to address the unique needs of focus category buyers and sellers as quickly and efficiently as specialist competitors. If we fail to timely deliver the product features desired in our focus and other categories, we may lose customers to the specialist competitors that serve these categories, which could reduce our consumer base and harm our business and operating results.
Current report
While we believe we compete effectively across these factors, our competitors, including any of the businesses, channels and buying and selling alternatives discussed above, may be more successful across these factors either globally or in important local markets, which could reduce the number of buyers and sellers on our Marketplace platforms, and materially adversely affect our results of operations and business.
Current report
•supply chain challenges, including fluctuations in shipping costs, limitations on shipping and receiving capacity, and other supply chain disruptions;
Current report
Several countries are considering or have implemented tariffs or other trade barriers or restrictions, as well as other measures impacting cross-border commerce, which could negatively affect our business and our users. The United States has implemented tariffs on certain foreign goods and may implement additional tariffs in the future. For example, in February 2025, the U.S. administration issued three Executive Orders imposing tariffs of 25% on goods imported from Canada and Mexico and an additional 10% on goods imported from China (including Hong Kong). The tariffs on imports from China took effect on February 4, 2025, while the tariffs on imports from Canada and Mexico were suspended until March 4, 2025. Such tariffs would eliminate the “de minimis” exemption from customs duties and taxes for imported goods falling below a threshold value. The elimination of the “de minimis” rule is paused pending the implementation of a system to collect tariffs on such imports. Such actions could give rise to an escalation of trade measures by the United States and impacted countries. For example, after the tariffs on goods imported from China went into effect, China announced retaliatory tariffs on certain goods imported from the United States. In addition, in February 2025, the U.S. administration announced plans to levy reciprocal tariffs against countries taxing U.S. imports. Developments with regard to the timing and manner in which tariffs will be implemented, the amount, scope and nature of tariffs, the countries subject to new or additional tariffs imposed by the United States, and tariffs imposed by other countries on goods imported from the United States are rapidly evolving and may change unexpectedly at any time.
Current report
Trade policy developments in the countries in which our buyers and sellers operate or procure their items, could significantly impact the cost of items sold internationally on our Marketplace platforms, limit our ability and the ability of our sellers to offer and deliver products on a timely or cost-effective basis, or otherwise adversely impact our consumers’ ability to sell products on our platforms. Further, adapting to new and changed trade restrictions can be expensive, time-consuming and very disruptive to our buyers and sellers. For example, tariffs generally apply based on the manufacturing location, rather than the selling location, of goods. These distinctions can be confusing for our sellers and lead to platform solutions that fail to satisfy all of our consumers. If we fail to quickly develop compliant shipping services that take manufacturing location into account when calculating tariff payments, our business to consumer sellers may be dissuaded from using our platforms. However, those same services may dissuade our consumer to consumer sellers from using our platforms, because they serve to increase the cost of the items they are selling.
Current report
Any change to the cost of buying and selling goods internationally, or even the public perception that such changes are imminent or could occur in the future, may reduce consumer confidence and the number of consumers using our platforms, drive consumers to alternative competitors or buying and selling channels and lead to a decrease in buying and selling on our platforms. Any such outcome could materially harm our consumers and our business, financial performance and results of operations. Although we are closely monitoring these developments to adapt to changing trade policies, there can be no assurances that we will be successful in mitigating any negative impacts.
Current report
For example, the role of AI technologies, including Gen AI, in ecommerce is increasing. We expect the importance of platform referrals from AI technologies to increase over time, as buyers and sellers increasingly rely on AI to help with buying and selling decisions. In particular, we are devoting significant capital and management time and resources to use large language models to improve our products and services and to build and expand our capabilities, including our processing capacity, proprietary datasets, machine learning models and systems. While we have substantial proprietary datasets that we believe can help us develop effective capabilities, like many companies, we are new entrants into the Gen AI space. We may be slower and less efficient than our competitors in developing our Gen AI capabilities and in optimizing and utilizing our dataset assets with other AI technologies. We may also fail to identify the AI technologies that consumers want, fail to invest sufficiently in those AI technologies, or otherwise fail to incorporate those technologies into our products and services in a timely, effective and compliant manner. Any of these outcomes could place our business at a competitive disadvantage compared to our competitors, many of whom may not yet exist or be identified. If we fail, for any reason, to receive sufficient AI referrals to our Marketplace platforms, to acquire, develop or license AI technology capabilities, to utilize our proprietary datasets effectively, or to provide our buyers and sellers the AI features that matter to them, our buyers and sellers or both may choose alternatives to eBay, which could reduce our platform traffic or profits or both, and harm our business.
Current report
New and changing technologies, industry-wide standards, and laws and regulations can also impact our ability to develop and implement the programs, products and services that our consumers want in a timely, effective and compliant manner. For example, the AI regulatory landscape is still uncertain and evolving, and the development and use of AI technologies, including Gen AI, in new or existing products and features may be subject to new or enhanced governmental or regulatory restrictions and scrutiny, litigation, ethical concerns or other complications over time. Our future success depends not only on our ability to develop new technologies, but also on our ability to identify and adapt to the technological changes that matter to our consumers and evolving legal, regulatory and industry standards that will govern those technologies. A shift in industry standards or laws and regulations could render some of our products and services obsolete or place them at a competitive disadvantage against other consumer buying and selling alternatives. We may lack the time, resources or experience to deliver the products and services that our consumers need when they need them, which could impact our ability to attract buyer and sellers to our platforms and harm our business. For example, our AI technologies will need to comply with AI regulations in all of our markets. We expect AI regulations in certain markets, such as the European Union and the United States, to be more restrictive than in other markets, which can place us at a disadvantage compared to companies that do not focus on markets with the most restrictive AI regulations. It may be more expensive or time consuming to develop an AI technology that satisfies AI regulations in each market that we serve and we cannot guarantee we will have the time or resources to develop multiple, compliant versions of these technologies.
Current report
We also face the risk that third parties will claim that we are responsible for seller content that infringes their intellectual property rights. We may become more vulnerable to these types of third-party claims as laws such as the Digital Millennium Copyright Act, the Lanham Act and the Communications Decency Act are interpreted by the courts, and as we expand the scope of our business (both in terms of the range of products and services that we offer and our geographical operations) and become subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries like ourselves are either unclear or less favorable. Any such claims, whether meritorious or not, are time consuming and costly to defend and resolve, could require expensive changes in our methods of doing business or could require us to enter into costly royalty or licensing agreements on unfavorable terms.
Current report
As the number of intellectual property owners and products in the software industry increases and the functionality of these products further overlaps, and as we acquire technology through acquisitions or licenses, we may become increasingly subject to patent suits and other infringement claims, including copyright, and trademark infringement claims. For example, the intellectual property ownership and license rights surrounding AI technologies, including Gen AI, have not been fully addressed by U.S. courts or by U.S. or international laws or regulations, and the use or adoption of third-party Gen AI technologies, and their related datasets, into our products and services may result in claims of intellectual property infringement or misappropriation, or in the inability to enforce our rights against third parties, which could in each case harm our business and financial results. Our use of “open source” software may subject us to certain unfavorable conditions, including conditions that: (i) we make publicly available the source code for any modifications or derivative works we create based upon, incorporating or using the open source software, (ii) we license such modifications or derivative works under the terms of the particular open source license, (iii) we waive intellectual property rights in any innovation that is derived using the open source software, or (iv) we offer our products that incorporate the open source software for low or no cost. There is little legal precedent or guidance governing the interpretation of the terms of some open-source licenses, so the potential impact of these terms on our business is uncertain and enforcement of these terms may result in unanticipated obligations or restrictions regarding our products or services. If an author of open source software or other third party that distributes open source software that we use or license were to allege that we had not complied with the conditions of the applicable license, we could incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from offering our products that make use of or are distributed with open source software, required to release proprietary source code, required to obtain licenses from third parties or otherwise be required to comply with the unfavorable conditions unless and until we can re-engineer the product so that it either complies with the open source license or does not incorporate the open source software. Any of the foregoing could disrupt our ability to offer our products and harm our business, revenue and financial results.
Current report
Cyberattacks and data security breaches and incidents could significantly damage our reputation, reduce our revenues, increase our costs, result in litigation and regulatory penalties, and otherwise harm our business.
Current report
We and our service providers face a variety of cybersecurity threats and risks or inadvertent or intentional data breaches and incidents. Cybersecurity threats can take a variety of forms, including malicious software programs that attack our networks and data centers or those of our service providers, social engineering, phishing, credential stuffing, ransomware, denial or degradation of service attacks and similar types of attacks against us, our employees, users and our service providers. Due to the size of our company and the volume of confidential information we possess, we are also at risk from inadvertent and intentional data disclosure, system or access misuse, unauthorized access or other improper actions by employees and service providers. Our increasing use of Generative AI tools could also result in a greater likelihood of cybersecurity incidents, privacy violations and inadvertent disclosures of our intellectual property or other confidential information, any of which could either directly or indirectly harm our business, operations and reputation. Further, if our internal security policies, procedures and practices fail for any reason, improper access, use or disclosure of data may result.
Current report
We have seen an increase in cyberattacks against us and other companies in our industry, and these attacks are increasing in sophistication. We provide cybersecurity training to our workforce. For example, we regularly train our workforce, upskill teams that handle sensitive data, and carry out bespoke trainings and tabletop exercises for leaders. We have also implemented policy, procedural, technical, physical and administrative controls intended to protect our systems from such incidents. However, no training or program can offer absolute protection against such attacks and incidents. For example, in 2014 we experienced a significant data breach involving unauthorized access to a database containing records of up to 145 million users. In the last two years, we have experienced and reported data breaches to regulators, but we do not believe these recent events were material and they did not result in any penalties or sanctions. However, future events could have a material impact on our business, results of operations or reputation. For more information about our cybersecurity risk management, governance and oversight, see “Item 1C: Cybersecurity.”
Current report
Any actual or attempted cyberattack, breach or data incident, or even an unfounded public rumor regarding such an attack, breach or incident, could have a material adverse effect on our business, reputation, financial condition or results of operation. eBay does not need to be the direct target of such attacks, breaches or incidents for them to have a material adverse effect on our operations. For example, a cyberattack on a key service provider, or a vulnerability in software that they use, could disrupt our services or compromise user and employee data entrusted to that service provider. We perform risk-based assessments of our service providers, but we do not control our service providers and our ability to monitor their data security is limited, so we cannot guarantee that their security measures will be adequate. In addition, we and our employees, users and service providers also may not discover a cyberattack, breach or other incident for a significant period after the incident occurs, which could amplify any adverse outcomes resulting from such incidents.
Current report
We maintain cybersecurity insurance and seek to include reasonable contractual and indemnity protections in the contracts we have with our service providers. However, the amounts, if any, that we recover under an insurance policy or service provider contract may not be sufficient to adequately reimburse us from cybersecurity and data breach liabilities and losses, and the reputational damage to our business that such incidents cause.
Current report
Regulators and civil litigants frequently seek to hold us liable for third party sales on our platform of products that they claim are regulated, unlawful or unsafe. For example, the Department of Justice (“DOJ”) on behalf of the Environmental Protection Agency (the “EPA”), continues to pursue a civil lawsuit (currently on appeal) alleging that we are liable for the sale of products they claim violate the Clean Air Act, the Toxic Substances Control Act and the Federal Insecticide, Fungicide and Insecticide Act. Further, we are also subject to claims by consumers that products they purchased from third-party sellers caused them bodily injury or harmed their property. We believe we are protected from such claims because the statutes and common law theories under which they are brought do not apply to our business model and/or because we are protected from liability under various laws, including 47 U.S.C. § 230 in the United States, the hosting defense under Art. 6 DSA in the EU and Reg.19 of the Electronic Commerce Regulations 2002 in the United Kingdom. However, this does not guarantee that we cannot experience losses from such claims. For example, pursuant to our 2024 settlement agreement with the DOJ, we paid $59 million and agreed to implement enhanced processes regarding our monitoring of listings that violate our terms of service to fully resolve the DOJ’s allegations of noncompliance with the Controlled Substances Act. See “Note 12 — Commitments and Contingencies — Litigation and Other Legal Matters” for more details. In addition, when regulators bring such claims against us, we can often face additional civil litigation from users on our platforms, stockholders and other stakeholders. As a result, even where we succeed in limiting or avoiding regulatory liability for third party sales, we often face significant additional litigation costs.
Current report
Importantly, laws vary by jurisdiction and we have seen an increase in litigation challenging these protections and in legislative and regulatory proposals to reduce or eliminate these protections. Adverse changes in laws and regulations that protect us from liability for third-party sales, or adverse interpretations of or litigation involving such laws and regulations, could subject us to substantial civil or criminal damages, limit the items we could allow on our Marketplace platforms, require us to modify our business model, and impose substantial additional compliance costs and operational constraints on our business. Any one of these outcomes could reduce the attractiveness of our Marketplace platforms to consumers, reduce our profits or otherwise harm our business and results of operations.
Current report
In addition, our success depends in part on our ability to collect and use data relating to merchants, consumers, and other individuals. Legislative proposals and existing laws and regulations have been increasingly focused on the use of tracking technologies, such as “cookies,” electronic communications and marketing. For example, in the European Economic Area and the United Kingdom, regulators are increasingly focusing on compliance with requirements related to the targeted advertising ecosystem. European regulators have issued significant fines in certain circumstances where the regulators alleged that appropriate consent was not obtained in connection with targeted advertising activities. If the use of tracking technologies is further restricted, regulated, or blocked by new laws, regulations and other practices, the amount or accuracy of user information we collect would decrease, which could make it more difficult for us to retain and upgrade existing customers and attract new customers and thus harm our business, financial condition, and results of operations.
Current report
We are subject to laws and regulations that are not primarily intended for online commerce, and interpretations of these laws and regulations could harm our business.
Current report
We have voluntarily established and publicly disclosed certain environmental, social and governance (“ESG”) goals, such as targets for waste avoidance and positive economic impacts associated with recommerce and reduced greenhouse gas emissions. These statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. Stakeholder expectations regarding ESG matters continue to evolve and are becoming increasingly divergent among and within stakeholders, and ESG matters have been the subject of increased regulatory and stakeholder attention and emerging and evolving regulatory requirements and frameworks. The imposition of new laws, changes in laws, regulatory requirements, policies, international accords or changing interpretations thereof, changes in the enforcement priorities of regulators, and differing or competing regulations and standards across the markets in which we operate, as well as relating to matters beyond our core products and services, including environmental sustainability, climate change, human capital and employment matters, could result in higher compliance and other costs, resulting in adverse effects on our business.
Current report
In addition, our failure to accomplish or accurately track and report on any of our stated goals, or otherwise meet evolving and varied stakeholder expectations, could adversely affect our reputation, financial performance and growth, and expose us to increased scrutiny from the investment community, regulatory authorities and other stakeholders. If our ESG goals or performance are perceived to be inadequate or worse than those of our competitors, if we are targeted by those who disagree with our public positions on ESG issues, or if we do not otherwise successfully manage ESG-related expectations across investors and other stakeholders, it could erode stakeholder trust, impact our reputation, subject us to litigation or shareholder activism, which could adversely affect our business and reputation. In addition, recent rapid and unpredictable shifts in public sentiment heighten these risks, and we believe our ability to respond effectively, sensitively and authentically to such developments will be important to stakeholders, including, among others, regulators, investors, customers and employees.
Current report
Investments in both fixed-rate and floating-rate interest-earning instruments are subject to varying levels of interest rate risk. As detailed in “Note 6 — Investments,” the fair market value of our fixed-rate investment securities was negatively affected by rising interest rates in 2022 and 2023. This trend persisted through most of 2024, though rates declined towards the end of the year. The high rates allowed us to invest at more favorable yields, improving the fair value of our fixed-rate investments. If rates decrease further, we would anticipate a reduction in investment income and a corresponding increase in fair value.
Current report
•the potential that we cannot complete these transactions on our desired timeline and terms;
Current report
•anti-trust or other similar regulatory enforcements and restrictions that could delay or nullify a transaction, impose restrictions on our operations or lead to subsequent litigation;
Current report
•increased costs and indebtedness associated with negotiating, financing and completing acquisitions;
Current report
•exposure to regulatory regimes unfamiliar to our business, which can divert management time and company resources;
Current report
•the possibility that we may not realize the expected benefits from such transactions within the anticipated time frame, or at all; and
Current report
As a result of a prior transaction, we own a significant number of Aurelia Netherlands TopCo B.V. (“Aurelia”) shares, representing approximately 8.3% of the outstanding equity of Aurelia. Because Aurelia is a privately held company without a readily determinable fair value and over which we are not able to exercise significant influence, our investment is accounted for under the measurement alternative where the carrying value is measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment. The value of our investment in Aurelia could fluctuate due to factors outside of our control, and a decline in value could require us to record an impairment, which could have a material adverse impact on our financial results. In addition, any decline in value could impact our ability to exit our investment on favorable market terms or our ability to liquidate the shares. Our ability to sell Aurelia shares is also constrained by certain contractual obligations. Any of these potential issues, if realized, could harm our business or negatively impact our financial results.
Removed paragraphs (14)
Previous report
•Our business is subject to online security risks, including security breaches and cyberattacks.
Previous report
•We could incur significant liability if the Distribution of PayPal is determined to be a taxable transaction.
Previous report
We may be unable to compete successfully against current and future competitors. Some current and potential competitors have longer operating histories, larger customer bases and greater brand recognition in other business and Internet sectors than we do.
Previous report
•supply chain disruptions including the ongoing disruptions to international shipping in the Red Sea;
Previous report
In 2023, we experienced reduced traffic in most markets resulting from geopolitical events (such as the ongoing war in Ukraine), inflationary pressure, foreign exchange rate volatility, elevated interest rates and lower consumer confidence. These factors are negatively impacting discretionary consumer spending and may continue to do so indefinitely, which could harm our business.
Previous report
Our business is subject to online security risks, including security breaches and cyberattacks.
Previous report
We may also need to expend significant additional resources to protect against security breaches or to redress problems caused by breaches. The increasing sophistication of attacks and regulatory requirements could require us to fundamentally change our business activities and practices to mitigate and/or respond to security vulnerabilities. Additionally, while we maintain insurance policies to protect against potential losses caused by security breaches, these policies may not be adequate to reimburse us for such losses, and we may not be able to fully collect, if at all, under these policies.
Previous report
For example, under the federal Telephone Consumer Protection Act (the “TCPA”), we face potential exposure to liability for certain types of telephonic communication with customers, including but not limited to text messages to mobile phones. Under the TCPA, plaintiffs may seek actual monetary loss or statutory damages of $500 per violation, whichever is greater, and courts may treble the damage award for willful or knowing violations. We are regularly subject to class-action lawsuits, as well as individual lawsuits, containing allegations that our businesses violated the TCPA. These lawsuits, and other private lawsuits not currently alleged as class actions, seek damages (including statutory damages) and injunctive relief, among other remedies. While a 2021 Supreme Court decision narrowed the applicability of the TCPA’s restrictions, plaintiffs continue to test the boundaries of the decision, and a few states, including Florida and Oklahoma, have adopted TCPA-like laws that similarly provide for statutory damages and a private right of action. Additional states may follow suit. Given the enormous number of communications we send to our users, a determination that there have been violations of the TCPA or other communications-based statutes could expose us to significant damage awards that could, individually or in the aggregate, materially harm our business.
Previous report
We have voluntarily established and publicly disclosed certain environmental, social and governance (“ESG”) goals, including targets for growth in less-advantaged communities and reduced greenhouse gas emissions. These statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. Our failure to accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance and growth, and expose us to increased scrutiny from the investment community, regulatory authorities and other stakeholders. If our ESG goals or performance are perceived to be inadequate, or if such goals or performance are perceived to be worse than those of our competitors, our reputation, our ability to attract or retain employees and our attractiveness as an investment, business partner or acquirer could be harmed.
Previous report
In addition, investments in both fixed-rate and floating-rate interest-earning instruments carry varying degrees of interest rate risk. As described more fully under “Note 7 – Investments,” in 2022 and 2023, the fair market value of our fixed-rate investment securities was adversely impacted due to a rise in interest rates, which may occur again in future periods. This increase was partially offset by increased interest income resulting from higher yielding investments in a higher interest rate environment. If rates were to return to lower levels, we would expect to see the opposite effect with a corresponding reduction in investment income and increase in fair value.
Previous report
We entered into a warrant agreement in conjunction with a commercial agreement with Adyen that entitles us to acquire a fixed number of shares of Adyen’s common stock subject to certain milestones being met. This warrant is accounted for as a derivative instrument under Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging. Changes in Adyen’s common stock price and equity volatility have had, and may continue to have in the future, a significant impact on the value of this warrant. We report this warrant on a quarterly basis at fair value in our consolidated balance sheets, and changes in the fair value of this warrant are recognized in our consolidated statement of income. Fluctuations in Adyen’s common stock price and prevailing foreign exchange rate or other changes in assumptions could result in material changes in the fair value that we report in our consolidated balance sheets and our consolidated statement of income, which could have a material impact on our financial results.
Previous report
As a result of a prior transaction, we own a significant number of Adevinta shares, and fluctuations in Adevinta’s share price and financial results and fluctuations in exchange rates could result in material changes in our consolidated balance sheet and our consolidated statement of income. As described more fully under “Note 7 — Investments — Equity Investments,” we recorded significant unrealized gains and losses in 2023 and 2022, respectively, relating to the change in fair value of these shares and also entered into an agreement in November 2023 to sell 50% of our shares and exchange our remaining shares for an equity stake of approximately 20% in a newly privatized Adevinta, which transaction remains subject to closing conditions and is expected to close in the second quarter of 2024 (the “Adevinta Transaction”). If the Adevinta Transaction closes and Adevinta shares cease to trade on the Oslo Stock Exchange, our ability to sell our shares in a newly privatized Adevinta in the future will be limited and subject to market conditions and other factors, which may impact the value we are able to realize from any such sales.
Previous report
We could incur significant liability if the Distribution of PayPal is determined to be a taxable transaction.
Previous report
We have received an opinion from outside tax counsel to the effect that our distribution of 100% of the outstanding common stock of PayPal to our stockholders on July 17, 2015 (the “Distribution”) qualifies as a transaction that is described in Sections 355 and 368(a)(1)(D) of the Internal Revenue Code. The opinion relies on certain facts, assumptions, representations and undertakings from PayPal and us regarding the past and future conduct of the companies’ respective businesses and other matters. If any of these facts, assumptions, representations or undertakings are incorrect or not satisfied, our stockholders and we may not be able to rely on the opinion of tax counsel and could be subject to significant tax liabilities. Notwithstanding the opinion of tax counsel that we have received, the IRS could determine on audit that the Distribution is taxable if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated or if it disagrees with the conclusions in the opinion. If the Distribution is determined to be taxable for U.S. federal income tax purposes, our stockholders that are subject to U.S. federal income tax and we could incur significant U.S. federal income tax liabilities.
Reworded paragraphs (85)
Previous wording
•Our business may be adversely affected by geopolitical events, natural disasters, seasonal factors and other factors that cause our users to spend less time, or transact less, on our websites or mobile platforms and applications, including increased usage of other websites.
Current wording
•Our business may be adversely affected by geopolitical events, natural disasters, seasonal factors and other factors, including increased usage of other websites, that could cause our users to spend less time, or transact less, on our websites or mobile platforms and applications.
Previous wording
•Failure to deal effectively with fraudulent activities on our platforms would increase our loss rate and harm our business, and could severely diminish merchant and consumer confidence in and use of our services.
Current wording
•Failure to deal effectively with fraudulent activities on our Marketplace platforms would increase our loss rate and harm our business and could severely diminish merchant and consumer confidence in and use of our services.
Previous wording
•New laws and increasing levels of regulation in the areas of privacy and protection of user data could harm our business.
Current wording
•New laws and increasing levels of regulation in the areas of privacy, protection of user data and cybersecurity could harm our business.
Previous wording
•Other laws and regulations could harm our business.
Current wording
•We are subject to laws and regulations that are not primarily intended for online commerce, and interpretations of these laws and regulations could harm our business.
Previous wording
•We may be exposed to claims and liabilities as a result of the Distribution.
Current wording
•We may be exposed to claims and liabilities as a result of the Distribution of PayPal.
Previous wording
•changes in consumer discretionary spending trends, including shifts in interests away from any of our major categories;
Current wording
•changes in consumer confidence and discretionary spending trends, including shifts in interests away from any of our major categories;
Previous wording
In view of the rapidly evolving nature of our business, period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon them as an indication of future performance. It is difficult for us to forecast the level or source of our revenues or earnings (loss) accurately, particularly given that substantially all of our net revenues each quarter come from transactions involving sales during that quarter. Due to the inherent difficulty in forecasting revenues, it is also difficult to forecast expenses as a percentage of net revenues. Quarterly and annual expenses as a percentage of net revenues reflected in our consolidated financial statements may be significantly different from historical or projected percentages. Because our business model is dependent upon consumer spending, our results of operations are sensitive to changes in or uncertainty about macro-economic conditions. Our buyers may in the future have less capacity for discretionary purchases and may reduce their purchases from our sellers as a result of various factors, including job losses, inflation (such as recent inflationary pressure), higher taxes, reduced access to credit, changes in federal economic policy, public health issues such as a pandemic, recent global economic uncertainty, lower consumer confidence and demand for discretionary goods, and geopolitical events such as recent international trade disputes and the ongoing wars in Ukraine and in Israel and Gaza, including the related disruptions to international shipping in the Red Sea.
Current wording
In view of the rapidly evolving nature of our business, period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon them as an indication of future performance. It is difficult for us to forecast the level or source of our revenues or earnings (loss) accurately, particularly given that substantially all of our net revenues each quarter come from transactions involving sales during that quarter. Due to the inherent difficulty in forecasting revenues, it is also difficult to forecast expenses as a percentage of net revenues. Quarterly and annual expenses as a percentage of net revenues reflected in our consolidated financial statements may be significantly different from historical or projected percentages. Because our business model is dependent upon consumer spending, our results of operations are sensitive to changes in or uncertainty about macro-economic conditions. Our buyers have at times had, and may in the future have, less capacity for discretionary purchases and may reduce their purchases from our sellers as a result of various factors, including job losses, inflation or inflationary pressure, higher taxes, reduced access to credit, changes in federal economic policy, public health issues such as a pandemic, global economic uncertainty, foreign exchange rate volatility, lower consumer confidence and demand for discretionary goods, elevated interest rates, changes in international tariff and trade policies, and geopolitical events such as the ongoing wars in Ukraine and in the Middle East.
Previous wording
The businesses and markets in which we operate are intensely competitive. We currently and potentially compete with a wide variety of online and offline companies providing goods and services to consumers and merchants, a number of which have significant resources, large user communities and well-established brands. The Internet and mobile networks provide new, rapidly evolving and intensely competitive channels for the sale of all types of goods and services. We compete in two-sided markets, and we must attract both buyers and sellers to use our platforms. Consumers who purchase or sell goods and services through us have more and more alternatives, and merchants have more channels to reach consumers. We expect competition to continue to intensify. The barriers to entry into these channels can be low, and businesses can easily launch online sites or mobile platforms and applications at nominal cost by using commercially available software or partnering with any of a number of successful ecommerce, search, advertising or social companies. As we respond to changes in the competitive environment, we may, from time to time, make pricing, service, policy or marketing decisions or acquisitions that may be controversial with and lead to dissatisfaction among sellers or buyers, which could reduce activity on our platform and harm our reputation and profitability.
Current wording
The businesses and markets in which we operate are intensely competitive. We currently and potentially compete with a wide variety of online and offline companies providing similar goods and services to consumers and merchants, some of which are well-established brands with greater resources and larger user communities than our own. The Internet and mobile networks provide new, rapidly evolving and intensely competitive channels for the sale of all types of goods and services. We compete as a two-sided marketplace, and we must attract both buyers and sellers to use our platforms. Consumers who purchase or sell goods and services through us have many and increasing alternatives, and merchants have more channels to reach consumers. We expect competition to continue to intensify. The barriers to entry into these channels can be low, and businesses can easily launch online sites or mobile platforms and applications at nominal cost by using commercially available software or partnering with any of a number of successful ecommerce, search, advertising or social media companies. As we respond to changes in the competitive environment, we have made, and expect in the future to make pricing, service, policy or marketing decisions or acquisitions that may be controversial with and lead to dissatisfaction among sellers or buyers. Any increase in seller or buyer dissatisfaction could negatively impact our revenue generation model, our costs or our business operations, any of which could reduce activity on our platform and harm our reputation and profitability.
Previous wording
We face increased competitive pressure online and offline. In particular, the competitive norm for, and the expected level of service from, ecommerce and mobile commerce has significantly increased due to, among other factors, improved user experience, greater ease of buying goods, lower (or no) shipping costs, faster shipping times and more favorable return policies. In addition, certain platform businesses, such as Alibaba, Alphabet (Google), Amazon, Apple and Meta (Facebook and Instagram), many of which are larger than us or have greater capitalization, have a dominant and secure position in other industries or certain significant markets, and offer other goods and services to consumers and merchants that we do not offer. If we are unable to change our products, offerings and services in ways that reflect the changing demands of ecommerce and mobile commerce marketplaces, including if sellers on our platforms are unable to source items or we are unable to provide higher service levels (some of which depend on services provided by sellers on our platforms) in line with consumer expectations, or if we are unable to compete effectively with and adapt to changes in larger platform businesses, our business and reputation will suffer.
Current wording
We face increased competitive pressure online and offline. In particular, the competitive norm for, and the expected level of service from, ecommerce and mobile commerce has significantly increased due to, among other factors, improved user experience, greater ease of buying goods, lower (or no) shipping costs, faster shipping times and more favorable return policies. In addition, certain platform businesses, such as Alibaba, Alphabet (Google), Amazon, Apple and Meta (Facebook and Instagram), are larger than we are, have greater resources, have a dominant and secure position in other industries or certain significant markets, or offer other goods and services to consumers and merchants that we do not offer, which can drive consumers to, and keep them locked-in to, their platforms instead of ours. If we are unable to change our products, offerings and services in ways that reflect the changing demands of ecommerce and mobile commerce marketplaces, including if our sellers are unable to source items or we are unable to provide service levels (some of which depend on services provided by sellers on our platforms) in line with consumer expectations, we may not compete effectively with and adapt to changes in larger platform businesses, and our business and reputation could suffer.
Previous wording
Competitors with other revenue sources or greater resources may also be able to devote more resources to marketing and promotional campaigns and buyer acquisition, adopt more aggressive pricing policies and devote more resources to website, mobile platforms and applications and systems development than we can. Other competitors may offer or continue to offer faster and/or free shipping, delivery on Sunday, same-day delivery, more favorable return policies or other transaction-related services which improve the user experience on their sites and which could be impractical or inefficient for our sellers to match. Competitors may be more narrowly focused on particular types of goods and create compelling communities and be able to innovate faster and more efficiently, and new technologies may increase these competitive pressures by enabling competitors to offer more efficient or lower-cost services.
Current wording
Competitors with other revenue sources or greater resources may also be able to devote more resources to marketing and promotional campaigns and buyer acquisition, adopt more aggressive pricing policies and devote more resources to website, mobile platforms and applications and systems development than we can. Other competitors may offer faster and/or free shipping, same-day delivery, more favorable return policies and other superior transaction-related services that improve the user experience on their sites, which could be impractical or inefficient for our sellers to match. Competitors may be more narrowly focused on particular types of goods and create compelling communities and may be able to innovate more quickly and efficiently, and new technologies may increase these competitive pressures by enabling competitors to offer more efficient or lower-cost services.
Previous wording
Some of our competitors control other products and services that are important to our success, including payment processing, Internet search, shipping and delivery resources, and mobile operating systems. Such competitors could manipulate pricing, availability, terms or operation of service related to their products and services in a manner that impacts our competitive offerings. For example, Alphabet, which operates a shopping platform service, has from time to time made changes to its search algorithms that have reduced the amount of search traffic directed to us from searches on Google. If we are unable to use or adapt to operational changes in such services, we may face higher costs for such services, face integration or technological barriers or lose customers, which could cause our business to suffer.
Current wording
Some of our competitors control products and services that are important to our success, including payment processing, Internet search, social media, Gen AI features powered by large language models, shipping and delivery resources and mobile operating systems. Such competitors could manipulate pricing, availability, terms or operation of service related to their products and services in a manner that impacts our competitive offerings. For example, Alphabet, which operates a shopping platform service, has from time to time made changes to its search algorithms that have reduced the amount of search traffic directed to us from searches on Google. If we are unable to use or adapt to operational changes in such services, we may face higher costs for such services, face integration or technological barriers or lose customers, which could harm our business.
Previous wording
Consumers who might use our sites to buy goods have a wide variety of alternatives, including traditional department, warehouse, boutique, discount and general merchandise stores (as well as the online and mobile operations of these traditional retailers), online retailers and their related mobile offerings, online and offline aggregation and classified services, social media platforms and other shopping channels, such as offline and online home shopping networks. In the United States, these include, but are not limited to, Amazon, Facebook, Instagram, Google, TikTok, Walmart, Target, Best Buy, Macy’s, Etsy, Shopify, Wayfair, Temu, Shein, and Rakuten, among others. In addition, consumers have a large number of online and offline channels focused on one or more of the categories of products offered on our sites, including but not limited to, Vinted, StockX, TheRealReal, Back Market, Chrono24, Fanatics, Farfetch, RockAuto, and GOAT Group, among others.
Current wording
Consumers that buy goods on our platforms have a wide variety of alternatives that compete against us regardless of their size or resources, including traditional department, warehouse, boutique, discount and general merchandise stores (as well as the online and mobile operations of these traditional retailers), online retailers and their related mobile offerings, direct-to-consumer offerings by makers of goods, online aggregation and classified services, social media platforms and other shopping channels, such as offline and online home shopping networks. In addition to generalist retailers, consumers may also use a large number of online and offline channels that are focused on one or more of the categories of products offered on our sites.
Previous wording
Consumers also can turn to many companies that offer a variety of services that provide other channels for buyers to find and buy items from sellers of all sizes, including social media, online aggregation and classifieds platforms, such as websites operated by Adevinta or Naspers Limited and others such as craigslist, Oodle.com and Meta. Consumers also can turn to shopping-comparison sites, such as Google Shopping, or social networks that enable purchases such as Pinterest, Facebook, Instagram and TikTok. In certain markets, our fixed-price listing and traditional auction-style listing formats increasingly are being challenged by other formats, such as classifieds. 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. Consumers may choose to search for products and services with a horizontal search engine or shopping comparison website, and such sites may also send users to other shopping destinations. In addition, sellers are increasingly utilizing multiple sales channels, including the acquisition of new customers by paying for search-related advertisements on horizontal search engine sites, such as Google, Naver and Baidu.
Current wording
Consumers that buy goods on our platforms can also turn to many companies that offer a variety of services that provide other channels to find what they are looking for, including social media, online aggregation and classifieds platforms, such as Facebook Marketplace or craigslist. These consumers can also turn to shopping-comparison sites, such as Google Shopping, or social networks that enable purchases such as Instagram and TikTok. Our competitors may partner with one another and create product offerings or implement advertising or marketing strategies that may be more compelling to customers than our standalone experience. In certain markets, our fixed-price listing and traditional auction-style listing formats are increasingly being challenged by other formats, such as social commerce and business models, such as free-to-sell marketplaces. 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. These consumers may choose to search for products and services with a horizontal search engine or shopping comparison website, and such sites may also send users to other shopping destinations. In addition, sellers are increasingly utilizing multiple sales channels, including search-related advertisements on horizontal search engine sites, such as Google, to attract new customers.
Previous wording
Consumers and merchants who might use our sites to sell goods also have many alternatives, including general ecommerce sites, such as Amazon, Alibaba, and Zalando, and more specialized sites, such as Etsy. Our international sites also compete for sellers with general and specialized ecommerce sites. Sellers may also choose to sell their goods through other channels, such as multi-channel services like Shopify or classifieds platforms. Consumers and merchants also can create and sell through their own sites, and may choose to purchase online advertising instead of using our services. In some countries, there are online sites that have larger customer bases and greater brand recognition, as well as competitors that may have a better understanding of local culture and commerce. We may increasingly compete with local competitors in developing countries that have these or other unique advantages, such as a greater ability to operate under local regulatory authorities.
Current wording
Consumers and merchants that sell goods on our platforms also have many alternatives, including general ecommerce marketplaces, such as Amazon and Alibaba, and more specialized marketplaces that focus on discrete categories of products. Sellers may also choose to sell their goods through alternative channels, such as multi-channel services like Shopify or social media platforms. Consumers and merchants also can create and sell through their own sites and may choose to purchase online advertising instead of using our services. Any of these alternatives or specialists may be able to more quickly and efficiently deliver attractive consumer experiences, which could drive consumers away from our Marketplace platforms and harm our business.
Previous wording
In addition, certain manufacturers or brands may seek to limit or cease distribution of their products through online channels, such as our sites. Manufacturers may attempt to use contractual obligations or existing or future government regulation to prohibit or limit ecommerce in certain categories of goods or services. Manufacturers may also attempt to enforce minimum resale price maintenance or minimum advertised price arrangements to prevent distributors from selling on our platforms or on the Internet generally, or drive distributors to sell at prices that would make us less attractive relative to other alternatives. The adoption of those or other policies could adversely affect our results of operations and result in loss of market share and diminished value of our brands.
Current wording
In addition, certain manufacturers or brands may seek to limit or cease distribution of their products through online channels, such as our sites. Manufacturers may attempt to use contractual obligations or existing or future government regulations to prohibit or limit ecommerce in certain categories of goods or services. Manufacturers may also attempt to enforce minimum resale price maintenance or minimum advertised price arrangements to prevent distributors from selling on our platforms or on the Internet generally, or drive distributors to sell at prices that would make us less attractive relative to other alternatives. The adoption of those or other policies could adversely affect our results of operations and result in loss of market share and diminished value of our brands.
Previous wording
Because we generate approximately half of our revenues outside the United States but report our financial results in U.S. dollars, our financial results are impacted by fluctuations in foreign currency exchange rates, or foreign exchange rates. The results of operations of many of our internationally focused platforms are exposed to foreign exchange rate fluctuations as the financial results of the applicable subsidiaries are translated from the local currency into U.S. dollars for financial reporting purposes.
Current wording
Because we generate approximately half of our net revenues outside the United States but report our financial results in U.S. dollars, our financial results are impacted by fluctuations in foreign currency exchange rates, or foreign exchange rates. The results of operations of many of our internationally focused platforms are exposed to foreign exchange rate fluctuations as the financial results of the applicable subsidiaries are translated from the local currency into U.S. dollars for financial reporting purposes.
Previous wording
•uncertainties and instability in economic and market conditions resulting from inflationary pressures, increasing interest rates and the ongoing wars in Ukraine and in Israel and Gaza, including the related disruptions to international shipping in the Red Sea;
Current wording
•uncertainties and instability in economic and market conditions resulting from inflationary pressures, increasing interest rates and the ongoing wars in Ukraine and in the Middle East;
Previous wording
•economic and trade sanctions, trade barriers and changes in trade regulations;
Current wording
•economic and trade sanctions, trade barriers or other restrictions on foreign trade and changes in trade regulations and restrictions, including between the United States and other countries;
Previous wording
•geopolitical events, including natural disasters, public health issues (including pandemics), acts of war (such as the ongoing wars in Ukraine and in Israel and Gaza), and terrorism;
Current wording
•geopolitical events, including natural disasters, public health issues (including pandemics), acts of war (such as the ongoing wars in Ukraine and in the Middle East), and terrorism;
Previous wording
•import or export regulations, including the complexities of seller compliance with “de minimis thresholds” and other parallel regulations across the broad range of categories and products offered on our platforms;
Current wording
•import or export regulations, including the complexities of seller compliance with “de minimis thresholds,” trade policies and tariffs in any of the countries where we operate or our users exist, customs and other parallel regulations across the broad range of categories and products offered on our platforms;
Previous wording
•different, uncertain, or more stringent user protection, data protection, data localization, privacy, and other data and consumer protection laws;
Current wording
•different, uncertain, or more stringent user protection, data protection, data localization, privacy, AI and other data and consumer protection and environmental laws;
Previous wording
Violations of the complex foreign and U.S. laws and regulations that apply to our international operations may result in fines, criminal actions, or sanctions against us, our officers, or our employees; prohibitions on the conduct of our business; and damage to our reputation. Although we have implemented policies and procedures designed to promote compliance with these laws, there can be no assurance that our employees, contractors, or agents will not violate our policies. These risks inherent in our international operations and expansion increase our costs of doing business internationally and could harm our business.
Current wording
Violations of the complex foreign and U.S. laws and regulations that apply to our international operations may result in fines, criminal actions, or sanctions against us, our officers, or our employees; prohibitions on the conduct of our business; and damage to our reputation. The United States government (including the Department of Treasury’s Office of Foreign Assets Control and the Department of Commerce’s Bureau of Industry and Security) and other jurisdictions and international bodies have imposed sanctions and export controls that prohibit us and our customers from engaging in trade or financial transactions with certain countries, businesses, organizations and individuals. In addition to the aforementioned adverse effects, these restrictions could also require us to divest certain of our businesses and assets and restrict our ability to operate in certain jurisdictions. Export control and economic sanctions laws and regulations are complex and likely subject to frequent changes, and the interpretation and enforcement of the relevant regulations involve substantial uncertainties, which may be driven by political and/or other factors that are out of our control or heightened by national security concerns. Although we have implemented policies and procedures designed to promote compliance with these laws, there can be no assurance that our employees, contractors, agents, or customers will not violate our policies. These risks inherent in our international operations and expansion increase our costs of doing business internationally and could harm our business.
Previous wording
Cross-border trade is an important source of both revenue and profits for us. Cross-border trade also represents our primary (or in some cases, only) presence in certain important markets, such as China, and various other countries. The interpretation and/or application of laws, such as those related to intellectual property rights of authentic products, selective distribution networks, and sellers in other countries listing items on the Internet, could impose restrictions on, or increase the costs of, purchasing, selling, shipping, or returning goods across national borders. The shipping of goods across national borders is often more expensive and complicated than domestic shipping. Changes to customs authorities’ “de minimis” thresholds, as well as increased costs or fees for third party sellers, logistics providers, or online marketplaces associated with changes in customs policy, as well as any other factors that increase the costs of cross-border trade or restrict, delay, or make cross-border trade more difficult or impractical would lower our revenues and profits and could harm our business.
Current wording
Cross-border trade is an important source of both revenue and profits for us. Cross-border trade also represents our primary (or in some cases, only) presence in certain important markets, such as China, and various other countries. The interpretation and/or application of laws, such as those related to intellectual property rights of authentic products, selective distribution networks, and sellers in other countries listing items on the Internet, could impose restrictions on, or increase the costs of, purchasing, selling, shipping, or returning goods across national borders. The shipping of goods across national borders is often more expensive and complicated than domestic shipping. Changes to customs authorities’ “de minimis” thresholds, as well as increased costs or fees for third party sellers, logistics providers, or online marketplaces associated with changes in customs policy, tariffs, and any other trade policies that increase the costs of cross-border trade or restrict, delay, or make cross-border trade more difficult or impractical would lower our revenues and profits and could negatively affect cross-border trade in countries where we conduct our business, which could reduce the number of consumers using our platforms and harm our business and results of operations.
Previous wording
Our business may be adversely affected by geopolitical events, natural disasters, seasonal factors and other factors that cause our users to spend less time, or transact less, on our websites or mobile platforms and applications, including increased usage of other websites.
Current wording
Our business may be adversely affected by geopolitical events, natural disasters, seasonal factors and other factors, including increased usage of other websites, that could cause our users to spend less time, or transact less, on our websites or mobile platforms and applications.
Previous wording
Our users may spend less time on our websites and our applications for mobile devices as a result of a variety of diversions and other factors, including: geopolitical events, such as war (including the ongoing wars in Ukraine and Israel and Gaza, including the related disruptions to international shipping in the Red Sea), the threat of war, social or political unrest, or terrorist activity; natural disasters; the physical effects of climate change (such as drought, flooding, wildfires, increased storm severity and sea level rise); and potential increases in the cost of energy due to climate change; power shortages or outages; major public health issues, including pandemics; less discretionary consumer spending; social networking or other entertainment websites or mobile applications; significant local, national or global events capturing the attention of a large part of the population; and seasonal fluctuations due to a variety of factors. If any of these, or any other factors, divert or otherwise prevent our users from using or transacting on our websites or mobile applications, our business could be materially adversely affected.
Current wording
Our users may spend less time on our websites and our applications for mobile devices as a result of a variety of diversions and other factors, including: geopolitical events, such as war (including the ongoing wars in Ukraine and in the Middle East), the threat of war, social or political unrest, or terrorist activity; natural disasters; the physical effects of climate change (such as drought, flooding, wildfires, increased storm severity and sea level rise); and potential increases in the cost of energy due to climate change; power shortages or outages; major public health issues, including pandemics; less discretionary consumer spending; social networking or other entertainment websites or mobile applications; significant local, national or global events capturing the attention of a large part of the population; and seasonal fluctuations due to a variety of factors. If any of these, or any other factors, divert or otherwise prevent our users from using or transacting on our websites or mobile applications, our business could be materially adversely affected.
Previous wording
Rapid, significant technological changes continue to confront the industries in which we operate and we cannot predict the effect of technological changes on our business. We also continuously strive to create new initiatives and innovations that promote growth, such as our payments and advertising offerings and other features that enhance the customer experience. We are also increasingly leveraging AI technologies, including GAI, in our products and services and are making investments to expand our use of GAI capabilities. In addition to our own initiatives and innovations, we rely in part on third parties, including some of our competitors, for the development of and access to new technologies, including GAI tools. We expect that new services and technologies applicable to the industries in which we operate will continue to emerge. These new services and technologies may be superior to, or render obsolete, the technologies we currently use in our products and services. Incorporating new technologies into our products and services may require substantial expenditures and take considerable time, and ultimately may not be successful. For example, GAI is a new and rapidly developing technology in its early stages of commercial use and presents certain inherent risks. GAI algorithms are based on machine learning and predictive analytics, which can create unintended biases and discriminatory outcomes, and outputs can be completely fabricated or false (e.g., GAI hallucinatory behavior) or contain copyrighted or other protected material. There is a risk that our algorithms could produce such outcomes or other unexpected results or behaviors that could harm our reputation, business, or buyers and sellers. In addition, our ability to adopt new services and develop new technologies may be inhibited by industry-wide standards, new laws and regulations, resistance to change from our users, clients or merchants, or third parties’ intellectual property rights. In particular, the AI regulatory landscape is still uncertain and evolving, and the development and use of AI technologies, including GAI, in new or existing products may result in new or enhanced governmental or regulatory activity and scrutiny, litigation, ethical concerns or other complications that could be costly and time-consuming and could adversely affect our business, reputation or financial results. Our future success will depend on our ability to develop new technologies and adapt to technological changes and evolving industry standards.
Current wording
Rapid, significant technological changes continue to confront the industries in which we operate, and we cannot predict the effect of technological changes on our business. We continuously strive to create new initiatives and innovations that promote growth, such as our financial services and advertising offerings, and other features that enhance the customer experience. Developing new features can be complex, time-consuming and costly, and our investments in new innovations may not yield the expected business or financial benefits. If we fail to anticipate or identify technological trends or fail to devote appropriate resources to adapt to such trends, our business could be harmed.
Previous wording
Our eBay Money Back Guarantee program represents the means by which we compensate users who believe that they have been defrauded, have not received the item that they purchased or have received an item different from what was described. We expect to continue to receive communications from users requesting reimbursement or threatening or commencing legal action against us if no reimbursement is made. Litigation, legislation, or regulation involving liability for any such third-party actions could result in increased costs of doing business, lead to adverse judgments or settlements or otherwise harm our business. In addition, affected users will likely complain to regulatory agencies that could take action against us, including imposing fines or seeking injunctions.
Current wording
Our eBay Money Back Guarantee program is intended to compensate users who believe that they have not received the item that they purchased or have received an item different from what was described. We expect to continue to receive communications from users requesting reimbursement or threatening or commencing legal action against us if no reimbursement is made. Litigation, legislation, or regulation involving liability for any seller fraud or non-performance could result in increased costs of doing business, lead to adverse judgments or settlements or otherwise harm our business. In addition, affected users may complain to regulatory agencies that could take action against us, including imposing fines or seeking injunctions.
Previous wording
Since our recent transition to our payments system, we have also experienced and may continue to experience increased costs from chargebacks on payments, due to instances of forced transaction reversals initiated by buyers through their payment card issuers. These forced transaction reversals can be initiated for a number of reasons, including, but not limited to, alleged fraud or seller nonperformance, among others.
Current wording
Since transitioning to our payments platform, we have experienced and may continue to experience increased costs from chargebacks on payments, due to instances of forced transaction reversals initiated by buyers through their payment card issuers. These forced transaction reversals can be initiated for a number of reasons, including, but not limited to, alleged seller fraud or nonperformance.
Previous wording
Additionally, in order to further strengthen our buyers’ confidence and trust in our services and the goods offered on our Marketplace, we introduced Authenticity Guarantee, an independent authentication service, in 2020 in select categories in the United States and have since expanded this service to more luxury categories and more markets. If we are unable to effectively manage the authentication process, including the third-party service providers on which we rely for much of our item authentication, we may suffer harm to our reputation and may be subject to litigation, which could be costly and time-consuming for us.
Current wording
Additionally, to further strengthen our buyers’ confidence and trust in our services and the goods offered on our Marketplace platforms, we offer authentication services, including our Authenticity Guarantee program. These services are available in certain of our categories and markets. If we are unable to effectively manage the authentication process, including the third-party service providers on which we rely for a significant volume of our item authentication, or if our buyers and sellers do not value these processes, we may suffer harm to our reputation and may be subject to litigation, which could be costly and time consuming for us and harm our business.
Previous wording
We have invested and plan to continue to invest internal resources into our payments tools in order to maintain existing availability, expand into additional markets and offer new payment methods and other types of financial services to our buyers and sellers. If we fail to invest adequate resources into payments on our platform, or if our investment efforts are unsuccessful, unreliable or result in system failure, our payments and financial services may not function properly or keep pace with competitive offerings, which could negatively impact their usage and our Marketplace. Future errors, failures or outages could cause our buyers and sellers to lose confidence in our payments system and could cause them to cease using our Marketplace.
Current wording
We have invested and plan to continue to invest internal resources into our payments tools in order to maintain existing availability, expand into additional markets and offer new payment methods and other types of financial services to our buyers and sellers. If we fail to invest adequate resources into payments on our platform, or if our investment efforts are unsuccessful, unreliable or result in system failure, our payments and financial services may not function properly or keep pace with competitive offerings, which could negatively impact their usage and our Marketplace platforms. Future errors, failures or outages could cause our buyers and sellers to lose confidence in our payments system and could cause them to cease using our Marketplace platforms.
Previous wording
We rely on third-party service providers to perform services related to compliance among other activities, credit card processing, payment disbursements, currency exchange, identity verification, sanctions screening, and fraud analysis and detection. As a result, we are subject to a number of risks related to our dependence on third-party service providers. If any or some of these service providers fail to perform adequately or if any such service provider were to terminate or modify its relationship with us unexpectedly, our sellers’ ability to use our platform to receive orders or payments could be adversely affected, which would increase costs, drive sellers away from our marketplaces, result in potential legal liability, and harm our business. In addition, we and our third-party service providers may experience service outages from time to time that could adversely impact payments made on our platform. Additionally, any unexpected termination or modification of those third-party services could lead to a lapse in the effectiveness of certain fraud prevention and detection tools.
Current wording
We rely on third-party service providers to perform services, including, among others credit card processing, payment disbursements, currency exchange, identity verification, sanctions screening, and fraud analysis and detection. As a result, we are subject to a number of risks related to our dependence on third- party service providers. If any or some of these service providers fail to perform adequately or if any such service provider were to terminate or modify its relationship with us unexpectedly, our sellers’ ability to use our platform to receive orders or payments could be adversely affected, which could increase our costs, drive sellers away from our marketplaces, result in potential legal liability, and harm our business. In addition, we and our third-party service providers may experience service outages from time to time that could adversely impact payments made on our platform. Additionally, any unexpected termination or modification of those third-party services could lead to a lapse in the effectiveness of certain fraud prevention and detection tools.
Previous wording
Our third-party service providers may increase the fees they charge us in the future, which would increase our operating expenses. This could, in turn, require us to increase the fees we charge to sellers and cause some sellers to reduce listings on our Marketplaces or to leave our platform altogether by closing their accounts.
Current wording
Our third-party service providers may increase the fees they charge us in the future, which would increase our operating expenses. This could, in turn, require us to increase the fees we charge and cause some buyers or sellers to reduce purchases or listings on our Marketplace platforms or to leave our platform altogether by closing their accounts.
Previous wording
Payments and other financial services are governed by complex and continuously evolving laws and regulations that are subject to change and vary across different jurisdictions in the United States and globally. As a result, we are required to spend significant time and effort to determine whether various licensing and registration laws as well as privacy and secrecy laws relating to payments and other financial services we offer apply to us and to comply with applicable laws and licensing and registration regulations. In addition, there can be no assurance that we will be able to obtain or retain any necessary licenses or registrations. Any failure or claim of failure by us or our third-party service providers to comply with applicable laws and regulations relating to payments or financial services could require us to expend significant resources, result in liabilities, limit or preclude our ability to enter certain markets and harm our reputation. In addition, changes in payment regulations, or other financial regulation, including changes to the credit or debit card interchange rates in the United States or other markets, could adversely affect payments on our platform and make our payments systems less profitable.
Current wording
Payments and other financial services are governed by complex and continuously evolving laws and regulations that are subject to change and vary across different jurisdictions in the United States globally. As a result, we are required to spend significant time and effort to determine whether various licensing and registration laws as well as privacy and secrecy laws relating to payments and other financial services we offer apply to us and to comply with applicable laws and licensing and registration regulations. In addition, there can be no assurance that we will be able to obtain or retain any necessary licenses or registrations. Any failure or claim of failure by us or our third-party service providers to comply with applicable laws and regulations relating to payments or financial services could require us to expend significant resources, result in liabilities, limit or preclude our ability to enter or continue to operate in certain markets and harm our reputation. In addition, changes in payment regulations, or other financial regulation, including changes to the credit or debit card interchange rates in the United States or other markets, could adversely affect payments on our platform and make our payments systems less profitable.
Previous wording
Further, we are indirectly subject to payment card association operating rules and certification requirements pursuant to agreements with our third-party payment processors. These rules and requirements, including the Payment Card Industry Data Security Standard and rules governing electronic funds transfers, are subject to change or reinterpretation, making it difficult for us to comply. Any failure to comply with these rules and certification requirements could impact our ability to meet our contractual obligations to our third-party payment processors and could result in potential fines. In addition, changes in these rules and requirements, including any change in our designation by major payment card providers, could require a change in our business operations and could result in limitations on or loss of our ability to accept payment cards or other forms of payment, any of which could negatively impact our business. Such changes could also increase our costs of compliance, which could lead to increased fees for us or our sellers and adversely affect payments on our platform or usage of our payments services and Marketplace.
Current wording
Further, we are indirectly subject to payment card association operating rules and certification requirements pursuant to agreements with our third-party payment processors. These rules and requirements, including the Payment Card Industry Data Security Standard and rules governing electronic funds transfers, are subject to change or reinterpretation, making it difficult for us to comply. Any failure to comply with these rules and certification requirements could impact our ability to meet our contractual obligations to our third-party payment processors and could result in potential fines. In addition, changes in these rules and requirements, including any change in our designation by major payment card providers, could require a change in our business operations and could result in limitations on or loss of our ability to accept payment cards or other forms of payment, any of which could negatively impact our business. Such changes could also increase our costs of compliance, which could lead to increased fees for us or our sellers and adversely affect payments on our platform or usage of our payments services and Marketplace platforms.
Previous wording
Our payments system is susceptible to illegal uses, including money laundering, terrorist financing, fraud and payments to sanctioned parties. If our compliance program and internal controls to limit such illegal activity are ineffective, government authorities could bring legal action against us or otherwise suspend our ability to offer payment services in one or more markets.
Current wording
Our payments system is susceptible to illegal uses, including money laundering, terrorist financing, fraud and payments to sanctioned parties. If our compliance program and internal controls to limit such illegal activity are ineffective, government authorities could bring legal action against us or otherwise suspend our ability to offer payments or financial services in one or more markets.
Previous wording
We believe the protection of our intellectual property, including our trademarks, patents, copyrights, domain names, trade dress, and trade secrets, is critical to our success. We seek to protect our intellectual property rights by relying on applicable laws and regulations in the United States and internationally, as well as a variety of administrative procedures. We also rely on contractual restrictions to protect our proprietary rights when offering or procuring products and services, including confidentiality and invention assignment agreements entered into with our employees and contractors and confidentiality agreements with parties with whom we conduct business.
Current wording
We believe the protection of our intellectual property, including our trademarks, patents, copyrights, domain names, trade dress, and trade secrets, is important to our success. We seek to protect our intellectual property rights by relying on applicable laws and regulations in the United States and internationally, as well as a variety of administrative procedures. We also rely on contractual restrictions to protect our proprietary rights when offering or procuring products and services, including confidentiality and invention assignment agreements entered into with our employees and contractors and confidentiality agreements with parties with whom we conduct business.
Previous wording
Additionally, we have repeatedly been sued for allegedly infringing other parties’ patents. We are a defendant in various patent suits and have been notified of several other potential patent disputes.
Current wording
Third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights. Additionally, we have repeatedly been sued for allegedly infringing other parties’ patents. We are a defendant in various patent suits and we are likely to be named as a defendant in other patent suits, or other intellectual property suits, in the future. These claims involve various aspects of our business as our products and services continue to expand in scope and complexity. Such claims may be brought directly or indirectly against us and/or against our customers (who may be entitled to contractual indemnification under their contracts with us), and we are subject to increased exposure to such claims as a result of our acquisitions and divestitures or where we are entering new lines of business.
Previous wording
As the number of intellectual property owners and products in the software industry increases and the functionality of these products further overlaps, and as we acquire technology through acquisitions or licenses, we may become increasingly subject to patent suits and other infringement claims, including copyright, and trademark infringement claims. For example, the intellectual property ownership and license rights surrounding AI technologies, including GAI, have not been fully addressed by U.S. courts or by U.S. or international laws or regulations, and the use or adoption of third-party GAI technologies into our products and services may result in exposure to claims of intellectual property infringement or misappropriation, which could harm our business and financial results. These or other intellectual property claims may be brought directly against us and/or against our customers whom we may indemnify either because we are contractually obligated to or because we choose to do so as a business matter. Such claims, whether or not meritorious, may be 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, cease conducting certain operations, make substantial payments to satisfy adverse judgments or settle claims, any of which could harm our business.
Current wording
These or other intellectual property claims may be brought directly against us and/or against our customers whom we may indemnify either because we are contractually obligated to or because we choose to do so as a business matter. Such claims, whether or not meritorious, may be 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, cease conducting certain operations, or make substantial payments to satisfy adverse judgments or settle claims, any of which could harm our business.
Previous wording
Failure to deal effectively with fraudulent activities on our platforms would increase our loss rate and harm our business, and could severely diminish merchant and consumer confidence in and use of our services.
Current wording
Failure to deal effectively with fraudulent activities on our Marketplace platforms would increase our loss rate and harm our business and could severely diminish merchant and consumer confidence in and use of our services.
Previous wording
We face reputational and other risks with respect to fraudulent activities on our platforms and periodically receive complaints from buyers and sellers who may not have received the goods that they had contracted to purchase or payment for the goods that a buyer had contracted to purchase. In some European and Asian jurisdictions, buyers may also have the right to withdraw from a sale made by a professional seller within a specified time period. While we can, in some cases, suspend the accounts of users who fail to fulfill their payment or delivery obligations to other users, we do not have the ability to require users to make payment or deliver goods, or otherwise make users whole other than through our protection programs. Although we have implemented measures to detect and reduce the occurrence of fraudulent activities, combat bad buyer experiences and increase buyer satisfaction, including evaluating sellers on the basis of their identity and transaction history and restricting or suspending their activity, there can be no assurance that these measures will be effective in combating fraudulent transactions or improving overall satisfaction among sellers, buyers, and other participants. If these measures fail to address fraud effectively, buyers and sellers could lose trust in our Marketplace, and our reputation and results of operations could suffer as a result. Additional measures to address fraud could negatively affect the attractiveness of our services to buyers or sellers, resulting in a reduction in the ability to attract new users or retain current users, damage to our reputation, or a diminution in the value of our brand names.
Current wording
We face reputational and other risks with respect to fraudulent activities on our platforms and periodically receive complaints from buyers and sellers who may not have received the goods that they had contracted to purchase or payment for the goods that a buyer had contracted to purchase. In some European and Asian jurisdictions, buyers may also have the right to withdraw from a sale made by a professional seller within a specified time period. While we can, in some cases, suspend the accounts of users who fail to fulfill their obligations to other users, we do not always have the ability to require users to make payment (such as when a payment method on file fails) or deliver goods, or otherwise make users whole other than through our protection programs. We have implemented measures to detect and reduce the occurrence of fraudulent activities, combat bad buyer and seller experiences and increase buyer and seller satisfaction, such as evaluating sellers based on identity and both buyers and sellers based on transaction history. These measures allow us to restrict or suspend buyer and seller activity when fraudulent activities are detected and they are intended to reduce situations in which sellers fail to receive payments for sold items. However, there can be no assurance that our efforts, now or in the future, will be effective in combating all fraudulent transactions or improving overall satisfaction among sellers, buyers, and other participants. If these measures fail to address fraud effectively, buyers and sellers could lose trust in our Marketplace platforms, and our reputation and results of operations could suffer as a result. Additional measures to address fraud could negatively affect the attractiveness of our services to buyers or sellers, resulting in a reduction in the ability to attract new users or retain current users, damage to our reputation, or a diminution in the value of our brand names.
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Current report — wording carried from elsewhere
Business, Economic, Market and Operating Risks
Current report — wording carried from elsewhere
In addition to our own initiatives and innovations, we rely in part on third parties, including some of our competitors, for the development of and access to new technologies. We expect that new services and technologies applicable to the industries in which we operate will continue to emerge. These new services and technologies may be superior to, or render obsolete, the technologies we currently use in our products and services. Incorporating new technologies into our products and services may require substantial expenditures and take considerable time and ultimately may not be successful. For example, Gen AI is a rapidly developing technology in its early stages of commercial use and presents certain inherent risks. There is a risk that our algorithms could produce false outcomes (e.g., Gen AI hallucinatory behavior) or other unexpected results or behaviors that could harm our reputation, business, or buyers and sellers, such as containing third party copyrighted or other protected content. In some cases, we use open source Gen AI software and datasets, which may lead to intellectual property disputes, including intellectual property ownership or copyright infringement disputes.
Current report — wording carried from elsewhere
Future attacks are likely to be increasingly sophisticated and highly targeted, particularly due to rapid developments in AI. Within the last year, hackers unsuccessfully targeted us using an AI-generated voice impersonation of a company leader. We expect these types of attacks to continue and evolve. Our information technology and infrastructure have at times been, and may in the future be, vulnerable to cyberattacks, including ransomware attacks, or security incidents and third parties may be able to access our employee and user data, including payment and financial data, that are stored on or accessible through our systems.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Other laws and regulations could harm our business.