PRSS 2017 Annual Report

23 • The need to develop new production, supplier and customer relationships; • Difficulties in enforcing contracts, collecting accounts receivables and longer payment cycles; • Regulatory, political or contractual limitations on our ability to operate and sell in certain foreign markets, including trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses as well as tax nexus issues for royalties paid to non-U.S. content providers; • Varying and more extensive data privacy and security laws and regulations in other countries; • Challenges of international delivery and customs requirements; • Varying product safety requirements and content restrictions in other countries; • Difficulties of language translations, increased travel, infrastructure and legal compliance and enforcement costs associated with international operations; • Currency transaction risk, which may negatively affect our revenue, cost of net revenue and gross margins, and could result in exchange losses; • Difficulty with managing widespread international operations and fulfillment partnerships; • Reduced protection for intellectual property rights in some countries; • The need to defend against intellectual property infringement claims against us in unfamiliar foreign legal regimes and to comply with unfamiliar foreign regulatory schemes and laws; • Lower per capita Internet usage and lack of appropriate infrastructure to support widespread Internet usage as well as broadband connections on which our content-rich services depend; • Heightened exposure to political instability, war and terrorism; and • Changes in the general economic and political conditions. Our success globally will depend on our ability to anticipate and effectively manage these and other risks associated with our international presence. Our failure to manage any of these risks successfully could harm our international reputation and reduce our international sales, adversely affecting our business, operating results and financial condition. If use of the Internet, particularly with respect to e-commerce, decreases or does not increase, our business and results of operations will be harmed. Our future revenue is substantially dependent upon the continued growth in the use of the Internet as an effective medium of business and communication by our target customers. Internet use may not continue to develop at historical rates and consumers may not continue to use the Internet and other online services as amedium for commerce for several reasons including the following: • Actual or perceived lack of security of information or privacy protection; • Attacks on or attempts to hijack our domain or website traffic or similar damage to our domains or servers; • Possible disruptions, computer viruses, spyware, phishing, attacks or other damage to the Internet servers, service providers, network carriers and Internet companies or to users’ computers; and • Excessive governmental regulation and new taxation measures. Our success will depend, in large part, upon third parties maintaining the Internet infrastructure to provide a reliable network backbone with the speed, data capacity, security and hardware necessary for reliable Internet access and services. Our business, which relies on contextually rich websites that require the transmission of substantial secure data, is also significantly dependent upon the availability and adoption of broadband Internet access and other high speed Internet connectivity technologies. Taxation risks could subject us to liability for past sales and cause our future sales to decrease. United States Supreme Court precedents currently restrict the imposition of obligations to collect state and local sales and use taxes with respect to sales made over the Internet. However, in recent years, a number of states, as well as the U.S. Congress, have attempted or are considering adoption of initiatives that limit or supersede the Supreme Court’s position regarding sales and use taxes on Internet sales or with respect to affiliate marketing programs we employ to generate sales on our websites. If these initiatives are successful, we could be required to collect sales taxes in additional states or change our business practices and we may be exposed to retroactive liability on sales. The imposition of a Federal tax scheme or the imposition by individual state and local governments of taxes upon Internet commerce or affiliate programs could create administrative burdens for us in the future that may pose operational challenges. We currently collect sales tax in states in which we believe we have established sales tax