eBay Inc. EBAY

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.

On September 27, 2023, the DOJ, on behalf of the Environmental Protection Agency (collectively, the “Government”), filed a civil complaint in the United States District Court for the Eastern District of New York (the “District Court”) alleging that we are liable for the sale of regulated or illicit products manufactured and sold by third parties who listed such products on the Marketplace platforms in a manner that evaded and/or was designed to evade detection in violation of the Clean Air Act, Federal Insecticide, Fungicide, and Rodenticide Act and the Toxic Substances Control Act. On September 30, 2024, the District Court issued an order dismissing the Government’s claims in their entirety. On November 26, 2024, the Government filed a Notice of Appeal with the Second Circuit, seeking review of the District Court’s decision. If the Government were to successfully appeal the decision and we were subsequently found to be liable for such activities on the Marketplace, we likely would be subject to monetary damages, compulsory changes in our business practices, or other remedies that could have a material adverse impact on our business. During the year ended December 31, third quarter of 2024, we released amounts previously accrued for estimated losses in connection with the Government’s claims, for which we previously believed a loss was probable. On November 26, 2024, the Government filed a Notice of Appeal with the United States Court of Appeals for the Second Circuit (the “Second Circuit”), seeking review of the District Court’s decision. On April 24, 2025, the Government filed a motion to voluntarily dismiss its appeal of the District Court’s decision. On April 25, 2025, the Second Circuit granted the Government’s motion, and the appeal was dismissed.

The increase in cost of net revenues during 2024 2025 compared to 2023 2024 was primarily due to a $53 increases of $108 million increase related to the expansion in shipping costs, $61 million in cost of promoted listings products, a $50 $55 million increase related to indirect tax expenses, a $32 million increase related to the ramp of eBay International Shipping, and an $11 million disposition of data center equipment, partially offset by a $66 million decrease in depreciation expense due to the prior year benefit related to the change in our estimate of the useful lives for of our servers and networking equipment and a $38 equipment, $37 million decrease in customer support costs, $32 million in payment processing costs driven and $11 million in authentication costs, partially offset by rate improvements. a $37 million benefit from the settlement of a multi-year contract and a $35 million decrease in indirect tax expense.