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or more aggressively enforce existing rules, taxes, or restrictions,
that could increase our expenses or prevent us from successfully
commercializing these initiatives. If we do not realize the expected
benefits of our investments, we may fail to grow and our business,
results of operations, and financial condition would be materially
adversely affected.
*If we fail to comply with federal, state, and foreign laws relating to
data privacy and data security, we may face potentially significant
liability, negative publicity, an erosion of trust, and increased
regulation and could materially adversely affect our business, results
of operations, and financial condition.*
Data privacy and data security laws, rules, and regulations are complex,
and their interpretation is rapidly evolving, making implementation and
enforcement, and thus compliance requirements, ambiguous, uncertain, and
potentially inconsistent. Compliance with such laws may require changes
to our data collection, use, transfer, disclosure, other processing, and
certain other related business practices and may thereby increase
compliance costs or have other material adverse effects on our business.
As part of Host and guest registration and business processes, we
collect and use personal data, such as names, dates of birth, email
addresses, phone numbers, and identity verification information (for
example, government issued identification or passport), as well as
credit card or other financial information that Hosts and guests provide
to us. The laws of many states and countries require businesses that
maintain such personal data to implement reasonable measures to keep
such information secure and otherwise restrict the ways in which such
information can be collected and used.
For example, the GDPR, which became effective on May 5, 2018, has
resulted and will continue to result in significantly greater compliance
burdens and costs for companies like ours. The GDPR regulates our
collection, control, processing, sharing, disclosure, and other use of
data that can directly or indirectly identify a living individual
("ersonal data", and imposes stringent data protection requirements with
significant penalties, and the risk of civil litigation, for
noncompliance.
Failure to comply with the GDPR may result in fines of up to 20 illion
Euros or up to 4% of the annual global revenue of the infringer,
whichever is greater. It may also lead to civil litigation, with the
risks of damages or injunctive relief, or regulatory orders adversely
impacting the ways in which our business can use personal data. Many
large geographies in which we operate, including Australia, Brazil,
Canada, China, and India, have passed or are in the process of passing
comparable or other robust data privacy and security legislation or
regulation, which may lead to additional costs and increase our overall
risk exposure.
In addition, from January 1, 2021 (when the transitional period
following Brexit expired), we are also subject to the GDPR, which,
together with the amended UK Data Protection Act of 2018, retains the
GDPR in UK national law. Both regimes have the ability to fine up to the
greater of 20 illion Euros (17 million British Pounds) or 4% of global
turnover, respectively. The UK framework may in the future start to
diverge from the EU framework, and these changes may lead to additional
costs and increase our overall risk exposure.
Additionally, we are subject to laws, rules, and regulations regarding
cross-border transfers of personal data, including laws relating to
transfer of personal data outside the European Economic Area ("EA".
Recent legal developments in Europe have created complexity and
uncertainty regarding transfers of personal data from the EEA and United
Kingdom to the United States and other jurisdictions. On July 6, 2020,
the CJEU invalidated the EU-US Privacy Shield Framework ("rivacy Shield"
under which personal data could be transferred from the EEA to US
entities that had self-certified under the Privacy Shield scheme. While
the CJEU upheld the adequacy of the standard contractual clauses (a
standard form of contract approved by the European Commission as an
adequate personal data transfer mechanism, and potential alternative to
the Privacy Shield), it noted that reliance on them alone may not
necessarily be sufficient in all circumstances; this has created
uncertainty and increased the risk around our international operations.
Following the CJEU' ruling, there has been increased regulatory action
in this area and several decisions by EU Data Protection Authorities
that transfer to the United States, including transfer to well-known
U.S. service providers, are unlawful. As the enforcement landscape
further develops, and supervisory authorities issue further decisions
and guidance on personal data export mechanisms, including circumstances
where the standard contractual clauses cannot be used or if our use of
certain products and vendors is the subject of investigation, we could
suffer additional costs, complaints, or fines, have to stop using
certain tools and vendors and make other operational changes, and/or if
we are otherwise unable to transfer personal data between and among
countries and regions in which we operate, it could affect the manner in
which we provide our services, the geographical location or segregation
of our relevant systems and operations, and could materially adversely
affect our business, results of operations and financial condition.
In addition to other mechanisms (particularly standard contractual
clauses), we previously relied on our own Privacy Shield certification
and, in limited instances, the Privacy Shield certifications of third
parties (for example, vendors and partners) for the purposes of
transferring personal data from the EEA and United Kingdom to the United
States. We continue to rely on the standard contractual clauses to
transfer personal data outside the EEA and United Kingdom, including to
the United States. Additionally, in certain circumstances, we rely on
derogations provided for by law. These recent developments may require
us to review and amend the legal mechanisms by which we make and/ or