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Risks Related to Our Business and Industry
−Removed: If we fail to innovate, enhance our brand, adapt and respond effectively to rapidly changing technology, our offerings may become less competitive or obsolete.
+Added: If we fail to innovate, enhance our brand, and adapt and respond effectively to rapidly changing technology, our offerings may become less competitive or obsolete.
Our investments in new solutions and technologies to address new marketing goals for our clients are inherently risky and may not be successful.
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If we are unable to enhance our solutions to meet market demand in a timely manner, we may not be able to maintain our existing clients or attract new clients, and our solutions may become less competitive or obsolete.
−Removed: Furthermore, brand promotion activities may not yield any increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building our brand.
+Added: Furthermore, brand promotion activities may not yield increased revenue sufficient to offset expenses or any increased revenue at all.
Our investments in our Commerce Media Platform and new technologies are inherently risky and may not be successful.
Addressing broader marketing and monetization goals, in particular customer acquisition and brand awareness, is relatively new to us, and we have had to invest substantial resources to adapt our model, pricing and organization to support this expansion.
−Removed: It also implies investing in new advertising channels such as Connected TV.
−Removed: Similarly, we do not have a long or established track record of competing successfully in this particular space.
+Added: It also implies investing in new advertising channels where we do not have a long or established track record of competing successfully.
If we are not successful in expanding our solutions along broader marketing goals, our results of operations could be adversely affected.
Furthermore, we believe that the importance of brand recognition will increase as competition in our market increases.
−Removed: Our business, including our global operations and sales, faces risk related to public health developments, and has been, and we expect will continue to be, negatively impacted by the ongoing COVID-19 pandemic and the global attempt to contain it.
−Removed: We face various risks related to public health developments and outbreaks of contagious disease, including the ongoing COVID-19 pandemic.
−Removed: Any outbreak of contagious diseases, and other adverse public health developments, could have a material adverse effect on our business operations.
−Removed: The spread of COVID-19 and the various attempts to contain it have created volatility, uncertainty and economic disruption to global society, economics, financial markets and business practices.
−Removed: Certain of our customers, especially those in the Travel vertical, as well as those in the Classifieds vertical and traditional brick-and-mortar retailers (specifically those without strong e-commerce channels), have seen their businesses and revenues negatively impacted by the COVID-19 pandemic.
−Removed: Even as efforts to contain the pandemic have made progress and some restrictions have relaxed, new variants of the virus are causing additional outbreaks.
−Removed: As a result, the COVID-19 pandemic has impacted, and may continue to impact, our business operations and financial position (including a potential negative impact on our revenues) as well as our employees, customers, partners and communities, and there is substantial uncertainty in the nature and degree of its continued effects over time.
−Removed: We have taken precautionary measures intended to minimize the risk of the spread of the virus to our employees, partners and clients, and the communities in which we operate.
−Removed: A wide range of governmental restrictions has also been imposed on our employees, clients and partners’ in an effort to limit the spread of COVID-19.
−Removed: There can be no assurance that precautionary measures, whether adopted by us or imposed by others, will be effective, and such measures could negatively affect our sales, marketing, and client service efforts, delay and lengthen our sales cycles, decrease our employees’, clients’, or partners’ productivity, or create operational or other challenges, any of which could harm our business and results of operations.
−Removed: To the extent the COVID-19 pandemic or any other public health development or outbreak adversely impacts our business, operations and financial results, it may also result in heightening the other risks described in “Item 1A.
−Removed: Risk Factors” and elsewhere in this Form 10-K.
−Removed: We face intense and increasing competition for employee talent, and if we do not retain and continue to attract highly skilled talent or retain our senior management team and other key employees, we may not be able to sustain our growth or achieve our business objectives.
−Removed: Our future success depends on our ability to continue to attract, hire, retain and motivate highly skilled employees, particularly AI experts, software engineers, product managers and other employees with the technical skills that enable us to deliver effective advertising solutions.
−Removed: Competition for diverse, experienced and highly skilled employees in our industry is intense, in particular in the fields of AI and data science, and we expect certain of our key competitors, who generally are larger than us and have access to more substantial resources, to pursue top talent aggressively on a global basis.
−Removed: Our future success also depends on the continued service of our senior management team.
−Removed: As a global team heading a global company, our management team must operate and collaborate across multiple physical locations and geographies, which can make coordinated management more challenging.
−Removed: Business transformation periods, changes in leadership and changes due to business reorganization may result in uncertainty, impact business performance and strategies, and retention of key personnel.
−Removed: We may be unable to attract or retain the management and highly skilled personnel who are critical to our success, which could hinder our ability to keep pace with innovation and technological change in our industry or result in harm to our key client and publisher relationships, loss of key information, expertise or proprietary knowledge and unanticipated recruitment and training costs.
−Removed: In addition, we believe that our corporate culture fosters teamwork, impactful results and an open environment.
−Removed: As our organization grows and evolves, and continues to adapt to a hybrid remote working environment, we may need to implement more complex organizational management structures or adapt our corporate culture and work environments to meet changing circumstances, such as during times of a natural disaster or adverse public health development or outbreak of contagious disease (including the COVID-19 pandemic).
−Removed: These changes could impact our ability to compete effectively, or could have an adverse impact on our corporate culture.
The market in which we participate is intensely competitive, and we may not be able to compete successfully with our current or future competitors.
−Removed: The market for digital advertising solutions is highly competitive and rapidly changing.
+Added: The market for digital advertising solutions, including specifically retail media, is highly competitive and rapidly changing.
New technologies and methods of buying advertising present a dynamic competitive challenge as market participants develop and offer multiple new products and services aimed at facilitating and/or capturing advertising spend.
−Removed: With the introduction of new technologies and the influx of new entrants to the market, including large established companies and companies that we do not yet know about or do not yet exist, we expect competition to persist and intensify in the future, which could harm our ability to increase sales and maintain our profitability.
+Added: With the introduction of new technologies and the influx of new entrants to the market, including large established companies, smaller companies that we do not yet know about, or companies that do not yet exist, we expect competition to persist and intensify in the future, which could harm our ability to increase sales and maintain our profitability.
Large and established internet and technology companies may have the power to significantly change the very nature of the digital advertising marketplaces in ways that could materially disadvantage us.
Some of these companies could leverage their positions to make changes to their web browsers, mobile operating systems, platforms, exchanges, networks or other solutions or services that could be significantly harmful to our business and results of operations.
−Removed: Some of these companies also have significantly larger resources than we do, and in many cases have advantageous competitive positions in popular products and services such as Amazon Advertising, Google Search, YouTube, Chrome, and Meta Platforms (formerly Facebook) including Facebook and Instagram, which they can use to their advantage.
−Removed: Furthermore, our competitors include large and established internet and technology companies that have invested substantial resources in innovation, which could lead to technological advancements that change the competitive dynamics of our business in ways that we may not be able to predict.
+Added: Some of these companies also have significantly larger resources than we do, and in many cases have advantageous competitive positions in popular products and services such as Amazon Advertising, Google Search, YouTube, Chrome, Meta Platforms, and Apple Search Ads, which they can use to their advantage.
+Added: Furthermore, our competitors have invested substantial resources in innovation, which could lead to technological advancements that change the competitive dynamics of our business in ways that we may not be able to predict.
In addition to competing for advertising spend, we compete with many companies for advertising inventory, some of whom also operate their own advertising networks or exchanges from which we buy advertising inventory.
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If this were to occur, our ability to place advertisements would be significantly impaired and our results of operations would be adversely affected.
−Removed: We also face competition for advertising spend from our own clients.
−Removed: Some large advertisers are increasingly developing retail media platforms and in-house advertising technologies, facilitated by self-service tools offered by internet and technology companies like Google and Adobe.
−Removed: Similarly, large enterprise marketing platforms, like Adobe, Oracle, and Salesforce.com, Inc., could create tools that offer our clients additional opportunities to allocate advertising dollars to in-house campaigns.
+Added: Some large advertisers, which could include our own clients, are increasingly developing retail media platforms and in-house advertising technologies, facilitated by self-service tools.
+Added: Similarly, large enterprise marketing platforms could create tools that offer our clients additional opportunities to allocate advertising dollars to in-house campaigns.
Competition could also hinder the success of new advertising solutions that we offer in the future.
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Any of these developments would make it more difficult for us to sell our offerings and could result in increased pricing pressure, reduced gross margins, increased sales and marketing expense and/or the loss of market share.
−Removed: If we fail to access a consistent supply of advertising inventory and expand our access to such inventory, our business and results of operations could be harmed.
−Removed: A large part of our revenue, in particular in our Criteo Marketing Solutions offering, is derived from placing advertisements on publisher digital properties that we do not own.
−Removed: As a result, we do not own or control the advertising inventory upon which our business depends.
−Removed: We currently access advertising inventory through various channels, including through direct relationships with publishers and large retailers, advertising exchange platforms and other platforms that aggregate the supply of advertising inventory.
−Removed: Since many widely used aggregators of advertising inventory are owned by companies that may compete with us for clients, competitive pressure may incentivize these companies to limit our access to advertising inventory available through their platforms.
−Removed: For example, in October 2019 we filed a complaint with the French Competition Authority against Meta Platforms (formerly Facebook), regarding practices which we believe impair the conditions of access to advertising inventories and to data concerning ad campaigns on Facebook under conditions that are not transparent or objective as well as "denigration" actions and difference of treatment.
−Removed: The fact that advertising inventory available within "walled-garden" publisher environments tends to grow faster than other advertising inventory available on the market may limit the growth of our access to advertising inventory or our mere access to it overall.
−Removed: In addition, industry or technological changes may affect our access to inventory or the price we pay for inventory.
−Removed: Similarly, our ability to continue to purchase inventory from many of the publishers and large retailers with whom we have direct relationships depends in part on our ability to consistently pay sufficiently competitive CPMs for their advertising inventory, or in the case of some Criteo Retail Media solutions, to generate sufficient advertising revenue for retailers, as well as our ability to offer advertisements from high quality companies.
−Removed: As more companies compete for advertising impressions on advertising exchange platforms and other platforms that aggregate supply of advertising inventory, advertising inventory may become more expensive, which may adversely affect our ability to acquire it and to deliver advertisements on a profitable basis.
−Removed: We may in the future have to increasingly rely on direct relationships with strong publisher partners in order to maintain the necessary access to quality advertising inventory, and we may not be able to do so on terms that are favorable to us.
−Removed: In addition, to support the growth of our solutions for customer acquisition and brand awareness marketing goals, we will need to expand our access to online video and Connected TV inventory, both in the web, mobile applications, and on connected devices, the price of which may not be available on terms that are favorable to us.
−Removed: Additionally, we are party to certain agreements with partners that provide us with preferred access to inventory.
−Removed: If the terms of those agreements change and we lose our preferred access, then our financial results could be adversely affected.
−Removed: If we are not successful in these endeavors, our business and results of operations could be harmed.
The failure by Criteo AI Engine to accurately predict engagement by users could result in significant costs to us, lost revenue and diminished business opportunities.
−Removed: The effective delivery of our digital advertising solutions depends on the ability of Criteo AI Engine to predict the likelihood that a consumer will engage with any given internet display advertisement with a sufficient degree of accuracy that our clients can achieve desirable returns on their advertising spend.
+Added: The effective delivery of certain of our digital advertising solutions depends on the ability of Criteo AI Engine to predict the likelihood that a consumer will engage with any given internet display advertisement with a sufficient degree of accuracy so that our clients can achieve desirable returns on their advertising spend.
We historically charged our clients primarily based on a cost-per-click pricing model, and our clients only paid us when a user engaged with the advertisement, usually by clicking on it.
−Removed: Although we have started evolving our pricing models alongside our broader suite of solutions, a large part of our revenue is still generated through cost-per-click pricing models or equivalent.
+Added: Although we have started evolving our pricing models alongside our broader suite of solutions, a large part of our revenue is still generated through cost-per-click pricing models or an equivalent.
Many of our agreements with clients are open-ended and often do not include a spending minimum.
Similarly, our contracts with publishers generally do not include long-term obligations requiring them to make their inventory available to us over long periods of time.
−Removed: Therefore, we need to continuously deliver satisfactory results for our clients and publishers in order to maintain and increase revenue, which in turn depends in part on the optimal functioning of Criteo AI Engine.
+Added: Therefore, we need to continuously deliver satisfactory results for our clients and publishers in order to maintain and increase revenue, which depends in part on the optimal functioning of Criteo AI Engine.
In addition, as we have increased the number of clients and publishers that use our offerings on a global basis, we have experienced significant growth in the amount and complexity of data processed by Criteo AI Engine and the number of advertising impressions we deliver.
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Trade associations and industry self-regulatory groups have also promulgated best practices and other industry standards relating to targeted advertising.
−Removed: In the European Union, the two main pillars of the data protection legal framework are the Directive on Privacy and Electronic Communications (E-Privacy Directive) and the GDPR.
+Added: In the European Union (the “EU”), the two main pillars of the data protection legal framework are the Directive on Privacy and Electronic Communications (E-Privacy Directive) and the GDPR.
The E-Privacy Directive directs EU member states to ensure that accessing information on an Internet user’s computer, such as through a cookie and other similar technologies, is allowed only if the Internet user has been informed about such access and given his or her consent.
−Removed: A recent ruling by the Court of Justice of the European Union clarified that such consent must be reflected by an affirmative act of the user, and European regulators are increasingly agitating for more robust forms of consent.
−Removed: These developments result in decreased reliance on implied consent mechanisms that have been used to meet requirements of the E-Privacy Directive in some markets.
−Removed: A replacement by an e-privacy regulation for the E-Privacy Directive is currently under discussion by EU member states to complement and bring electronic communication services in line with the GDPR and force a harmonized approach across EU member states.
−Removed: It is possible that the proposed e-privacy regulation could further impede the use of cookies and the fines and penalties for breach could be significant.
+Added: A recent ruling by the Court of Justice of the EU clarified that such consent must be reflected by an affirmative act of the user in line with the requirements applicable to consent under the GDPR.
+Added: These developments result in ending reliance on implied consent mechanisms that have been used to meet requirements of the E-Privacy Directive in some markets.
+Added: A replacement by an E-Privacy Regulation for the E-Privacy Directive is still under discussion by EU member states to align it to the GDPR and force a harmonized approach across EU member states.
+Added: It is possible that the proposed E-Privacy Regulation could further impede the use of cookies.
+Added: However, the advancement of the legislative process for the adoption of the E-Privacy Regulation remains quite uncertain.
Under GDPR, data protection authorities have the power to impose administrative fines of up to a maximum of €20 million or 4% of the data controller’s or data processor’s total worldwide turnover of the preceding financial year.
−Removed: Similarly, the e-privacy regulation, once enacted, could result in new rules and mechanisms for "cookie" consent.
+Added: Similar sanctions would be applicable under the E-Privacy Regulation to cookie consent.
Further, on October 1, 2020, the French data protection authority ( Commission Nationale de l'Informatique et des Libertés , or "CNIL") issued the final version of its guidelines on the use of cookies and other trackers and its final recommendations on modalities for obtaining users’ consent to store or read non-essential cookies and similar technologies on their devices.
The recommendations provide that, when required, consent must be indicated by a clear and positive action of the data subject, such as by clicking on an “accept all” button on the first layer of the consent management platform.
−Removed: CNIL also noted that it should be as easy to refuse consent to the use of cookies as it is to accept consent, and a “refuse all” button should be present on the first layer of the consent management platform, equivalent to the “accept all” button in terms of size, position and color.
+Added: CNIL also noted that it should be as easy to refuse consent to the use of cookies as it is to accept consent, and an equivalent “refuse all” button should be present on the first layer of the consent management platform.
Further, the ability to withdraw consent must be readily available at all times.
−Removed: The recommendations are not binding, nor are they intended to be prescriptive and exhaustive.
−Removed: Companies had until March 2021 to ensure compliance with these guidelines, and CNIL is currently auditing many websites in France to verify if they comply with its guidelines.
−Removed: In 2018, the State of California adopted the California Consumer Privacy Act of 2018, or the CCPA.
+Added: Companies had until March 2021 to ensure compliance with these guidelines.
+Added: CNIL has launched investigations and sanctioned companies for lack of compliance with its guidelines on cookies.
+Added: The European Center for Digital Rights (NOYB) has also filed several complaints with data protection authorities for failure to comply with GDPR requirements.
+Added: In January 2020, CNIL opened a formal investigation into Criteo in response to a November 2018 complaint filed by Privacy International.
+Added: CNIL’s investigation also covers another complaint against Criteo received in December 2018 by CNIL from NOYB.
+Added: On August 3, 2022, the assigned investigator ( rapporteur ) issued a report that claimed certain GDPR violations.
+Added: The report includes a proposed financial sanction against the Company of €60.0 million ($63.9 million) .
+Added: A final decision on resolution and potential financial penalties would likely not occur until mid-2023.
+Added: Refer to Note 19.
+Added: Commitments and Contingencies for more information.
+Added: In 2018, the State of California adopted the California Consumer Privacy Act of 2018 (the “CCPA”).
The CCPA has been characterized as the first “GDPR-like” privacy statute to be enacted in the U.S.
−Removed: because its scope, and a number of the key provisions, resemble the GDPR.
−Removed: The CCPA establishes a new privacy framework for covered businesses by, among other requirements, creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of personal data from minors, creating new notice obligations and new limits on the sale of personal information, and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
+Added: because its scope, and a number of the key provisions, resemble GDPR.
+Added: The CCPA establishes a new privacy framework for covered businesses by, among other requirements, creating an expanded definition of personal information, establishing new data privacy rights for consumers in California, imposing special rules on the collection of personal data from minors, creating new notice obligations and new limits on the sale of personal information, and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
As currently enacted, we and partners in our industry have been required to comply with these requirements since January 1, 2020, when the CCPA became effective.
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In November 2020, voters in California voted to pass the California Privacy Rights Act (“CPRA”), which both amends and expands the scope of the CCPA.
−Removed: The CPRA will become effective on January 1, 2023, with a look back period to January 1, 2022.
+Added: The CPRA became effective on January 1, 2023, with a look back period to January 1, 2022.
The CPRA creates new criteria by which businesses can be regulated, expands the definition of “personal information” to more closely match European regulations, a new audit requirement, and the creation of an agency to oversee enforcement of the CPRA.
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We cannot predict the timing or outcome of this adaptation or the effect on our business.
−Removed: Adapting our business to the CCPA and the forthcoming new requirements under the CPRA could involve substantial resources and expense, and may cause us to divert resources from other aspects of our business, all of which may adversely affect our business.
+Added: our business to the CCPA and the new requirements and regulations under the CPRA could involve substantial resources and expense, and may cause us to divert resources from other aspects of our business, all of which may adversely affect our business.
In addition, other states in the U.S.
are quickly adopting state enacted privacy laws.
−Removed: Recently Virginia and Colorado passed privacy laws that differ slightly from the CPRA.
+Added: Virginia, Colorado and more recently, Connecticut and Utah passed consumer and privacy laws that differ slightly from the CCPA/CPRA.
If other states follow suit, it could lead to a varied and complex regulatory landscape, which could result in material costs.
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If our clients fail to adhere to our contracts in this regard, or a court or governmental agency determines that we have not adequately, accurately or completely described our own solutions, services and data collection, use and sharing practices in our own disclosures to consumers, then we and our clients and publisher partners may be subject to potentially adverse publicity, damages and related possible investigation or other regulatory activity in connection with our privacy practices or those of our clients.
−Removed: In November 2018, Privacy International filed a complaint with relevant data protection authorities against Criteo and a number of other similarly situated advertising technology companies, arguing that certain of these companies' practices do not comply with the GDPR.
−Removed: In January 2020, CNIL opened a formal investigation into Criteo in response to this complaint, which is still ongoing as per CNIL’s notification to Criteo dated June 23, 2021, which notified the Company of the appointment of an investigator (rapporteur).
−Removed: Their investigation also covers another complaint against Criteo received by the CNIL from European Center for Digital Rights (NOYB).
−Removed: There can be no assurance that actions by the Company will not be required as a result of the investigation.
+Added: If we fail to access a consistent supply of advertising inventory and expand our access to such inventory, our business and results of operations could be harmed.
+Added: A large part of our revenue, in particular in our Criteo Marketing Solutions offering, is derived from placing advertisements on publisher digital properties that we do not own.
+Added: As a result, we do not own or control the advertising inventory upon which our business depends.
+Added: We currently access advertising inventory through various channels, including through direct relationships with publishers, supply side platforms and other platforms that aggregate advertising inventory, as well as large retailers..
+Added: Since advertising inventory available within walled-garden publisher environments tends to grow faster than other advertising inventory available on the market, general access or growth of our access to advertising inventory may be limited.
+Added: In addition, industry or technological changes may affect our access to inventory or the price we pay for inventory.
+Added: Similarly, our ability to continue to purchase inventory from many of the publishers and large retailers with whom we have direct relationships depends in part on our ability to consistently pay sufficiently competitive CPMs for their advertising inventory, or in the case of some Criteo Retail Media solutions, to generate sufficient advertising revenue for retailers, as well as our ability to offer advertisements from high quality companies.
+Added: As more companies compete for advertising impressions on advertising exchange platforms and other platforms that aggregate supply of advertising inventory, advertising inventory may become more expensive, which may adversely affect our ability to acquire it and to deliver advertisements on a profitable basis.
+Added: We may in the future have to increasingly rely on direct relationships with strong publisher partners in order to maintain the necessary access to quality advertising inventory, and we may not be able to do so on terms that are favorable to us.
+Added: In addition, to support the growth of our solutions for customer acquisition and brand awareness marketing goals, we will need to expand our access to online video and Connected TV inventory, both in the web, mobile applications, and on connected devices, the price of which may not be available on terms that are favorable to us.
+Added: Additionally, we are party to certain agreements with partners that provide us with preferred access to inventory.
+Added: If the terms of those agreements change and we lose our preferred access, then our financial results could be adversely affected.
+Added: If we are not successful in these endeavors, our business and results of operations could be harmed.
+Added: Our success depends on our ability to implement our business transformation and achieve our global business strategies.
+Added: Our business has recently undergone, and continues to undergo, a significant transformation, partially in response to major changes in the advertising technology industry driven by, but not limited to, regulations such as GDPR and restrictions on data collection and use, including those implemented by large technology companies.
+Added: The components of our transformation include diversification of our services as we shift away from third-party cookies, focus on growth and investment, and certain organization adjustments and cost optimization opportunities.
+Added: Our future performance and growth depend on the success of this transformation and our new business strategies, including our management team’s ability to successfully implement them.
+Added: Our ongoing transformation has resulted, and may continue to result, in changes to business priorities and operations, capital allocation priorities, operational and organizational structure, and increased demands on management.
+Added: Such changes could result in short-term and one-time costs, lost customers, reduced sales volume, higher than expected restructuring costs, loss of key personnel and other negative impacts on our business.
+Added: We may also become subject to the risks of workforce dissatisfaction, negative publicity and business disruption in connection with these initiatives.
+Added: Completion of our business transformation may take longer than anticipated, and, once implemented, we may not realize, in full or in part, the anticipated benefits or the realization of such benefits may be delayed.
+Added: The failure to realize benefits or savings, which may be due to our inability to execute plans, delays in the implementation of the transformation and our product roadmap, global or local economic conditions, competition, changes in the advertising technology industry and the other risks described herein, could have a material adverse effect on our business, financial condition and results of operations, as well as the trading price of our securities.
Our business depends on our ability to maintain the quality of content for our clients and publishers.
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Further, our publishers and exchange partners rely upon us not to place advertisements with inappropriate or unlawful content on their websites.
−Removed: As we grow our business to serve a larger number of smaller clients using self-service tools with less intervention by us, it could become more challenging to train and support such clients to use such tools and to prevent inappropriate or unlawful advertisements from being shown.
+Added: As we grow our business to serve a larger number of clients using self-service tools with less intervention by us, it could become more challenging to train and support such clients to use such tools and to prevent inappropriate or unlawful advertisements from being shown.
If we are unable to maintain the quality of our client and publisher content as the number of clients and publishers we work with continues to grow, our reputation and business may suffer and we may not be able to retain or secure additional clients or publisher relationships.
−Removed: Our success depends on our ability to implement our business transformation and achieve our global business strategies.
−Removed: Our business has recently undergone, and continues to undergo, a significant transformation, partially in response to major changes in the advertising technology industry driven by, but not limited to, regulations such as the GDPR and restrictions on data collection and use, including those implemented by large technology companies.
−Removed: The components of our transformation include diversification of our services as we shift away from third-party cookies, focus on growth and investment, and certain organization adjustments and cost optimization opportunities.
−Removed: Our future performance and growth depends on the success of this transformation and our new business strategies, including our management team’s ability to successfully implement them.
−Removed: Our ongoing transformation has resulted and may continue to result in changes to business priorities and operations, capital allocation priorities, operational and organizational structure, and increased demands on management.
−Removed: Such changes could result in short-term and one-time costs, lost customers, reduced sales volume, higher than expected restructuring costs, loss of key personnel and other negative impacts on our business.
−Removed: We may also become subject to the risks of labor unrest, negative publicity and business disruption in connection with these initiatives.
−Removed: Completion of our business transformation may take longer than anticipated, and, once implemented, we may not realize, in full or in part, the anticipated benefits or such benefits may be realized more slowly than anticipated.
−Removed: The failure to realize benefits or savings, which may be due to our inability to execute plans, delays in the implementation of the transformation, global or local economic conditions, competition, changes in the advertising technology industry and the other risks described herein, could have a material adverse effect on our business, financial condition and results of operations, as well as the trading price of our securities.
We may not be able to effectively integrate the businesses we acquire, which may adversely affect our ability to achieve our growth and business objectives.
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If we identify an appropriate acquisition candidate, we may not be successful in negotiating the terms and/or financing of the acquisition, and our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product, solution or technology, including issues related to intellectual property, product quality or architecture, employees or clients, regulatory compliance, including tax compliance, practices or revenue recognition or other accounting practices.
−Removed: Any acquisition or investment, including the contemplated IPONWEB Acquisition, may require us to use significant amounts of cash, incur debt, issue potentially dilutive equity securities or incur contingent liabilities or amortization of expenses, or impairment of goodwill and/or purchased long-lived assets, and restructuring charges, any of which could harm our financial condition or results.
+Added: Any acquisition or investment may require us to use significant amounts of cash, incur debt, issue potentially dilutive equity securities or incur contingent liabilities or amortization of expenses, or impairment of goodwill and/or purchased long-lived assets, and restructuring charges, any of which could harm our financial condition or results.
The Company has incurred and will incur significant transaction and acquisition-related costs in connection with its acquisitions, including legal, accounting, financial advisory, regulatory and other expenses.
The payment of such transaction costs could have an adverse effect on our financial condition, results of operations or cash flows.
−Removed: In addition, acquisitions, including our recent acquisitions such as the contemplated IPONWEB Acquisition and the Mabaya Acquisition, involve numerous risks, any of which could harm our business, including:
+Added: In addition, acquisitions, including our recent acquisitions such as the IPONWEB Acquisition, involve numerous risks, any of which could harm our business, including:
• difficulties in integrating the operations, technologies, services and personnel of acquired businesses, especially if those businesses operate outside of our core competency and market;
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If we are unable to successfully integrate the businesses we have acquired or any business, product, solution, technology or team we acquire in the future, our business and results of operations could suffer, and we may not be able to achieve our business and growth objectives.
−Removed: Failure to complete the IPONWEB Acquisition could have an adverse effect on our business, financial condition and results of operations and could negatively impact our stock price.
−Removed: The IPONWEB Acquisition is subject to certain customary conditions to closing that must be satisfied or waived (to the extent permissible), in each case prior to the completion of the acquisition.
−Removed: These conditions to the completion of the acquisition, some of which are beyond our control and that of IPONWEB, may not be satisfied or waived in a timely manner or at all, and, accordingly, the acquisition may be delayed or not completed.
−Removed: Any failure of the pending IPONWEB Acquisition to be completed could have an adverse effect on our business, financial condition and results of operations and could negatively impact our stock price.
−Removed: The current market price of our stock may reflect an assumption that the pending acquisition will occur and failure to complete the acquisition could result in a decline in our stock price.
+Added: We will incur direct and indirect costs as a result of the acquisition of the business of IPONWEB Holding Limited.
+Added: We may not realize the growth opportunities that are anticipated from the acquisition as we may experience difficulties in integrating IPONWEB’s business with ours.
+Added: We have substantial client concentration in certain local markets and solutions, with a limited number of clients accounting for a substantial portion of our revenues in those areas.
+Added: Although our overall customer base is well-diversified, with our largest 10 clients only representing 17.8% of our revenue in the aggregate in 2022, in certain of our local markets and specific solutions we derive a substantial portion of revenues from a limited number of clients.
+Added: We cannot predict the future level of demand for our services and products that will be generated by these clients.
+Added: In addition, revenues from these clients may fluctuate from time to time.
+Added: Further, some of our contracts with these clients may permit them to terminate use of our products at any time (subject to notice and certain other provisions).
+Added: If we fail to retain any of these clients and any of these clients terminate or reduce use of our products, our revenues within local markets or specific solutions may be negatively impacted.
Our international operations and expansion expose us to several risks.
As of December 31, 2022, we had a direct operating presence through 27 offices located in 18 countries and did business in 94 countries.
−Removed: Our current global operations and future initiatives involve a variety of risks, including, in addition to risks described elsewhere in this section:
−Removed: • operational and execution risk, including localization of the product interface and systems, translation into foreign languages, adaptation for local practices, adequate coordination of timing to onboard local clients and publishers, difficulty of maintaining our corporate culture, challenges inherent to hiring and efficiently managing an increased number of employees over large geographic distances, and the increasing complexity of the organizational structure required to support expansion and operations into multiple geographies and regulatory systems;
+Added: Our current global operations and future initiatives involve a variety of risks, including:
+Added: • operational and execution risk, including localization of the product interface and systems, translation into foreign languages, adaptation for local practices, adequate coordination of timing to onboard local clients and publishers, difficulty of maintaining our corporate culture, challenges inherent to hiring and efficiently managing employees over large geographic distances, and the increasing complexity of the organizational structure required to support expansion and operations into multiple geographies and regulatory systems;
• insufficient, or insufficiently coordinated, demand for and supply of advertising inventory in specific geographic markets processed through Criteo AI Engine, which could impair its ability to accurately predict user engagement in that market;
−Removed: • compliance with (and liability for failure to comply with) applicable local laws and regulations, including, among other things, laws and regulations with respect to data protection and user privacy, tax and withholding, labor regulations, anti-corruption, environment, consumer protection, spam and content, which laws and regulations may be inconsistent across jurisdictions;
+Added: • compliance with (and liability for failure to comply with) applicable local laws and regulations, including, among other things, laws and regulations with respect to data protection and user privacy, data use, tax and withholding, labor regulations, anti-corruption, environment, consumer protection, economic sanctions (including those resulting from the conflict between Russia and Ukraine), public health crises (including the COVID-19 pandemic), spam and content, which laws and regulations may be inconsistent across jurisdictions;
• intensity of local competition for digital advertising budgets and internet display inventory;
−Removed: • changes in a specific country’s or region’s political or economic conditions;
+Added: • changes in a specific country’s or region’s political or economic conditions, including as a result of the ongoing conflict between Russia and Ukraine;
• risks related to tariffs and trade barriers, pricing structure, payment and currency, including aligning our pricing model and payment terms with local norms, higher levels of credit risk and payment fraud, difficulties in invoicing and collecting in foreign currencies and associated foreign currency exposure, restrictions on foreign ownership and investments, and difficulties in repatriating or transferring funds from or converting currencies;
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In addition, hedging transactions carry their own risks and costs, and could expose us to additional risks that could harm our financial condition and operating results.
−Removed: If we fail to manage our growth and the shift in our client portfolio toward the midmarket effectively, we may be unable to execute our business plan or maintain high levels of client and publisher satisfaction.
−Removed: We have experienced, and may in the future experience, rapid growth and changes in our client portfolio, which have created, and may continue to create, challenges to the quality of our service to our clients, and which have placed, and may continue to place, significant demands on our management and our operational and financial resources.
−Removed: For example, over the years, the size of our business with Tail clients (previously called midmarket clients) has grown significantly as a proportion of our overall business, and it may continue to grow in the future.
−Removed: While we intend to put more focus on our Strategic and Core clients and therefore less emphasis on the Tail client category, should our business evolve toward the Tail category, there are several additional risks to our business, including risks relating to the financial stability of our clients and our ability to collect accounts receivable from such clients.
−Removed: In addition, since our business with Tail clients is comprised of thousands of smaller clients that require significant resources to support, it is currently less profitable than our business with Strategic and Core clients.
−Removed: Overall there may not be a direct correlation between a change in the number of clients in a particular period and an increase or decrease in our revenue.
−Removed: If we fail to successfully manage the anticipated changes in our client portfolio and the associated changes in employee headcount and our organizational structure, our brand and reputation may suffer, which would in turn impair our ability to attract and retain clients and publishers and our results of operations.
+Added: The ongoing conflict between Russia and Ukraine may adversely affect our business and results of operations .
+Added: The current conflict between Russia and Ukraine and related government actions are evolving and beyond our control, and given our global operations, such conflict may adversely affect our business and results of operations.
+Added: As a result of this conflict, we decided to suspend all ad campaigns and digital advertising activities in Russia until further notice.
+Added: Our current business in Russia and Ukraine is limited, and in 2021, it represented less than 2% of our Contribution ex-TAC.
+Added: In addition, as part of the acquisition of the Iponweb business, we have entered into a transitional services agreement to cover certain R&D and back office functions that are delivered to the acquired Iponweb entities from contractors and/or employees based in Russia until June 2023.
+Added: The current conflict between Russia and Ukraine may also have the effect of heightening many other risks disclosed in our public filings, any of which could materially and adversely affect our business and results of operations.
+Added: Such risks include, but are not limited to:
+Added: adverse effects on global macroeconomic conditions, including increases in inflation;
+Added: regional instability and geopolitical shifts;
+Added: supply chain disruption;
+Added: increased exposure to cyberattacks;
+Added: limitations in our ability to implement and execute our business strategy, including our completed acquisition of the Iponweb business;
+Added: risks to employees and contractors that we have in the region;
+Added: and exposure to foreign currency fluctuations.
+Added: We face intense competition for employee talent, and if we do not retain and continue to attract highly skilled talent or retain our senior management team and other key employees, we may not be able to achieve our business objectives.
+Added: Our future success depends on our ability to continue to attract, hire, retain and motivate highly skilled employees, particularly AI experts, software engineers, product managers and other employees with the technical skills that enable us to deliver effective advertising solutions.
+Added: Competition for diverse, experienced and highly skilled employees in our industry is intense, in particular in the fields of AI and data science, and we expect certain of our key competitors, who generally are larger than us and have access to more substantial resources, to pursue top talent on a global basis.
+Added: Our future success also depends on the continued service of our senior management team.
+Added: As a global team heading a global company, our management team must operate and collaborate across multiple physical locations and geographies, which can make coordinated management more challenging.
+Added: Business transformation periods, changes in leadership and changes due to business reorganization may result in uncertainty, impact business performance and strategies, and retention of key personnel.
+Added: We may be unable to attract or retain the management and highly skilled personnel who are critical to our success, which could hinder our ability to keep pace with innovation and technological change in our industry or result in harm to our key client and publisher relationships, loss of key information, expertise or proprietary knowledge and unanticipated recruitment and training costs.
+Added: In addition, we believe that our corporate culture fosters teamwork, impactful results and an open environment.
+Added: As our organization evolves and continues to adapt to a flexible remote working environment we may need to implement more complex organizational management structures or adapt our corporate culture and work environments to meet changing circumstances, such as during times of a natural disaster or adverse public health development or outbreak of contagious disease (including the COVID-19 pandemic).
+Added: These changes could impact our ability to compete effectively, or could have an adverse impact on our corporate culture.
Our future success will depend in part on our ability to expand into new industry verticals.
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Further, as we expand our client base and offering into new industry verticals, we may be unable to maintain our current client retention rates.
−Removed: As we expand the market for our solutions, we may become more dependent on advertising agencies as intermediaries, which may adversely affect our ability to attract and retain business, or exert downward pressure on our margins.
+Added: As we expand the market for our solutions, we may become more dependent on advertising agencies as intermediaries, which may adversely affect our ability to attract and retain business.
As we market our solutions, we may increasingly need advertising agencies to work with us in assisting businesses in planning and purchasing for broader marketing goals.
−Removed: Over the second half of 2021, 50% of Criteo Retail Media's gross media spend and 29% of Criteo Marketing Solutions' gross media spend relied on advertising agencies.
−Removed: Overall, we believe that accessing broader advertising budgets by partnering with advertising agencies represents a significant incremental business opportunity for us.
−Removed: However, an increasing exposure to advertising agencies may also represent significant risks.
+Added: In the last quarter of 2022, 37% of Criteo Retail Media’s gross media spend and 33% of Criteo Marketing Solutions’ gross media spend relied on advertising agencies.
+Added: Overall, we believe that accessing broader advertising budgets by partnering with advertising agencies represents a significant incremental business opportunity for us, though it also may involve significant risks.
For example, if we have an unsuccessful engagement with an advertising agency on a particular advertising campaign, we risk losing the ability to work not only for the client for whom the campaign was run, but also for other clients represented by that agency.
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In addition, an increased dependency on advertising agencies may harm our results of operations, as a result of the increased agency fees we may be required to pay and/or as a result of longer payment terms from agencies.
+Added: Our business, including our global operations and sales, faces risks and negative impacts related to public health developments, such as the COVID-19 pandemic.
+Added: We face various risks related to public health developments and outbreaks of contagious disease.
+Added: Any outbreak of contagious diseases, and other adverse public health developments, could have a material adverse effect on the business of our customers and partners and on our business operations.
+Added: The COVID-19 pandemic created volatility, uncertainty and economic disruption to global society, economics, financial markets and business practices.
+Added: Pandemics may impact our business operations and financial position, as well as our employees, clients, partners and communities.
+Added: To the extent any public health development or outbreak adversely impacts our business, operations and financial results, it may also result in heightening the other risks described in “Item 1A.
+Added: Risk Factors” and elsewhere in this Form 10-K.
Our future success will depend in part on our ability to expand into new advertising channels.
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Since then, we have expanded into mobile in-browser and in-app, native display, including on social media platforms, and online video inventory.
−Removed: In the future, we may decide to broaden the spectrum of our advertising channels further, including Connected TV and Digital Out of Home, if we believe that doing so would significantly increase the value we can offer to clients.
+Added: We may decide to broaden the spectrum of our advertising channels further, including recently into Connected TV and Digital Out of Home, if we believe that doing so would significantly increase the value we can offer to clients.
However, any future attempts to enter new advertising channels may not be successful.
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• adapt our solutions to additional advertising channels and effectively market it for such additional advertising channels to our existing and prospective clients;
−Removed: • integrate newly developed or acquired advertising channels into our pricing and measurement models, with a clear and measurable performance attribution mechanism that works across all channels, and in a manner that is consistent with our privacy standards;
−Removed: • achieve client performance levels through the new advertising channels that are similar to those delivered through existing advertising channels, and in any case that are not dilutive to the overall client performance;
+Added: • integrate newly developed or acquired advertising channels into our pricing and measurement models, with a clear and measurable performance attribution mechanism that works across all channels, and is consistent with our privacy standards;
+Added: • achieve client performance levels through the new advertising channels that are similar to those delivered through existing advertising channels, and are not dilutive to the overall client performance;
• identify and establish acceptable business arrangements with inventory partners and platforms to access inventories in sufficient quality and quantity for these new advertising channels;
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• compete with new market participants active in these additional advertising channels;
−Removed: • hire and retain key personnel with relevant technology and product expertise to lead the integration of additional advertising channels onto our platform, and sales and operations teams to sell and integrate additional advertising channels.
−Removed: Any decrease in the use of internet display advertisements, mobile in-browser and in-app, native display, including on social media platforms, and online video advertising, whether due to clients losing confidence in the value or effectiveness of such channels, regulatory or technology restrictions or if we are unable to successfully adapt our solutions to additional advertising channels and effectively market such offerings to our existing and prospective clients, or if we are unable to maintain our pricing and measurement models in these additional advertising channels, may prevent us from achieving our growth or business objectives.
+Added: • attract and retain key personnel with relevant technology and product expertise to lead the integration of additional advertising channels onto our platform, and sales and operations teams to sell and integrate additional advertising channels.
+Added: Any decrease in the use of current advertising channels, whether due to clients losing confidence in the value or effectiveness of such channels, regulatory or technology restrictions or if we are unable to successfully adapt our solutions to additional advertising channels and effectively market such offerings to our existing and prospective clients, or if we are unable to maintain our pricing and measurement models in these additional advertising channels, may prevent us from achieving our growth or business objectives.
We operate in a rapidly evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
−Removed: Our historical growth rates may not be indicative of our future growth, and we expect our operating and capital investments to continue to increase in the foreseeable future.
−Removed: Accordingly, we may have difficulty sustaining profitability.
+Added: Our historical growth rates may not be indicative of our future growth, and we may have difficulty sustaining profitability.
We operate in a rapidly evolving industry.
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• maintain the breadth of our media owner network and attract new publishers and media owners, including large retailers, publishers of web content, mobile applications and video and social games, in order to grow the volume and breadth of advertising inventory available to us;
−Removed: • broaden our solutions portfolio to include additional marketing and monetization goals (including awareness and consideration) for commerce companies and consumer brands across the open Internet, including web, apps and stores;
−Removed: • adapt our offering to meet evolving needs of businesses, including to address market trends such as (i) the continued migration of consumers from desktop to mobile and from websites to mobile applications, (ii) the increasing percentage of sales that involve multiple digital devices, (iii) the increasing retailer adoption of retail media monetization solutions, (iv) the growing adoption by consumers of “ad-blocking” software on web browsers on desktop and/or on mobile devices and use or consumption by consumers of advertising-free services, (v) changes in the marketplace for and supply of advertising inventory, including the shift toward header bidding, (vi) changes in the overall ecosystem such as Apple's introduction of its Intelligent Tracking Prevention feature into its Safari browser and its App Tracking Transparency feature in its iOS14.5 mobile operating system, Microsoft’s Tracking Prevention feature in its Edge browser, and Mozilla’s introduction of Enhanced Tracking Protection into its Firefox browser and (vii) changes in consumer acceptance of tracking technologies for targeted or behavioral advertising purposes;
+Added: • broaden our solutions portfolio to include additional marketing and monetization goals (including discovery and choice) for commerce companies and consumer brands across the open Internet, including web, apps and stores;
+Added: • adapt our offering to meet evolving needs of businesses, including to address market trends such as (i) the continued migration of consumers from desktop to mobile and from websites to mobile applications, (ii) the increasing percentage of sales that involve multiple digital devices, (iii) the increasing retailer adoption of retail media monetization solutions, (iv) the growing adoption by consumers of “ad-blocking” software on web browsers on desktop and/or on mobile devices and use or consumption by consumers of advertising-free services, (v) changes in the marketplace for and supply of advertising inventory, including the shift toward header bidding, (vi) changes in the overall ecosystem resulting in signal loss and (vii) changes in consumer acceptance of tracking technologies for targeted or behavioral advertising purposes;
• maintain and increase our access to data necessary for the performance of Criteo AI Engine;
• continuously improve the algorithms underlying Criteo AI Engine and apply state-of-the-art machine learning approaches and hardware;
−Removed: • continue to adapt to a changing regulatory landscape governing data protection and privacy matters.
−Removed: We also anticipate continuing to invest in our business to increase the scale of our solutions, existing and new, grow our headcount and expand our operations.
−Removed: In particular, we plan to continue to focus on maximizing our Contribution after traffic acquisition costs on an absolute basis, which we call Contribution ex-TAC, as we believe this focus fortifies a number of our competitive strengths.
+Added: • continue to adapt to a changing regulatory landscape governing data use, data protection and privacy matters.
+Added: We also anticipate continuing to invest in our business to increase the scale of our Commerce Media Platform and expand our operations.
+Added: In particular, we plan to continue to focus on maximizing our Contribution ex-TAC, as we believe this focus fortifies a number of our competitive strengths.
Our focus on maximizing Contribution ex-TAC on an absolute basis may have an adverse impact on our gross margin and we cannot be certain that this strategy will be successful or result in increased liquidity or long-term value for our shareholders.
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Any downturn or increased competitive pressure in any of our core industries, or other industries we may target in the future, may cause our clients to reduce their spending with us, or delay or cancel their advertising campaigns with us.
−Removed: We have substantial client concentration in certain local markets and solutions, with a limited number of clients accounting for a substantial portion of our revenues in those areas.
−Removed: Although our overall customer base is well-diversified, with our largest 10 clients only representing 16.6% of our revenue in the aggregate in 2021, in certain of our local markets and specific solutions we derive a substantial portion of revenues from a limited number of clients.
−Removed: There are inherent risks whenever a large percentage of revenues within any specific market or solution are concentrated within a limited number of clients.
−Removed: We cannot predict the future level of demand for our services and products that will be generated by these clients.
−Removed: In addition, revenues from these clients may fluctuate from time to time.
−Removed: Further, some of our contracts with these clients may permit them to terminate use of our products at any time (subject to notice and certain other provisions).
−Removed: If we fail to retain any of these clients and any of these clients terminate or reduce use of our products, our revenues within local markets or specific solutions may be negatively impacted.
We experience fluctuations in our results of operations due to a number of factors, which make our future results difficult to predict and could cause our operating results to fall below expectations or our guidance.
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• demand for our offering and the size, scope and timing of digital advertising campaigns;
−Removed: • the relative lack of long-term agreements with our clients and publishers;
+Added: • for certain parts of our business, the relative lack of long-term agreements with our clients and publishers;
• client and publisher retention rates;
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• foreign currency exchange rate fluctuations, as some of our foreign sales and costs are denominated in their local currencies;
−Removed: • failure to successfully manage any acquisitions;
−Removed: • general economic and political conditions in our domestic and international markets.
−Removed: As a result, we may have a limited ability to forecast the amount of future revenue and expense, and our results of operations may from time to time fall below our estimates or the expectations of public market analysts and investors.
+Added: • failure to successfully manage or integrate any acquisitions;
+Added: • general economic and political conditions in our domestic and international markets, including public health crises (such as the COVID-19 pandemic) and geopolitical conflicts (such as the conflict between Russia and Ukraine).
+Added: As a result, we may have a limited ability to forecast future revenue and expenses, and our results of operations may from time to time fall below our estimates or the expectations of public market analysts and investors.
Risks Related to Data Privacy, Intellectual Property and Cybersecurity
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Using cookies and non-cookie based mechanisms, such as hashed emails, hashed customer log-ins, mobile phone numbers or mobile advertising identifiers, we collect information about the interactions of users with our clients’ and publishers’ digital properties (including, for example, information about the placement of advertisements and users’ shopping or other interactions with our clients’ websites or advertisements).
−Removed: Our ability to successfully leverage such data depends on our continued ability to access and use such data, which could be restricted by a number of factors, including consumer choice, restrictions imposed by counterparties (such as clients, supply sources and publishers, who may also compete with us for advertising spend and inventory) and web browser developers or other software developers, changes in technology, including changes in web browser technology, increased visibility of consent or “do not track” mechanisms or “ad-blocking” software, and new developments in, or new interpretations of, laws, regulations and industry standards.
+Added: Our ability to successfully leverage such data depends on our continued ability to access and use such data, which could be restricted by a number of factors, including consumer choices, restrictions imposed by counterparties (such as clients, supply sources and publishers, who may also compete with us for advertising spend and inventory), web browser developers or other software developers, changes in technology, including changes in web browser technology, increased visibility of consent or “do not track” mechanisms or “ad-blocking” software, the emergence of new opt-out signals such as “Global Privacy Control” and “Global Privacy Platform”, and new developments in, or new interpretations of, laws, regulations and industry standards.
These types of restrictions could materially impair the results of our operations.
Web browser developers, such as Apple, Mozilla Foundation, Microsoft or Google, have implemented or may implement changes in browser or device functionality that impair our ability to understand the preferences of consumers, including by limiting the use of third-party cookies or other tracking technologies or data indicating or predicting consumer preferences.
−Removed: Today, three major web browsers — Apple’s Safari, Mozilla’s Firefox and Microsoft’s Edge — block third party cookies by default.
+Added: Today, four major web browsers — Apple’s Safari, Mozilla’s Firefox, Microsoft’s Edge, and Samsung Internet Browser — block third party cookies by default.
Internet users can also delete cookies from their computers at any time.
−Removed: In January 2020, Google announced that it plans to phase out support for third-party cookies in Chrome, which has since been delayed until late 2023.
+Added: In January 2020, Google announced that it plans to phase out support for third-party cookies in Chrome, which has since been delayed until the second half of 2024.
Google controls more than 60% of the browser market and has an even more dominant position in the digital advertising market.
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In addition, our ability to collect and use data may be restricted or prevented by a number of other factors, including:
−Removed: • the failure of our network, hardware, or software systems, or the network, hardware, or software systems of our clients;
+Added: • the failure of our, or our clients’, network, hardware, or software systems;
• our inability to grow our client and publisher base in new industry verticals and geographic markets in order to obtain the critical mass of data necessary for Criteo AI Engine to perform optimally in such new industry verticals or geographic markets;
• malicious traffic (such as non-human traffic) that introduces “noise” in the information that we collect from clients and publishers;
−Removed: • interruptions, failures or defects in our data collection, mining, analysis and storage systems.
+Added: • interruptions, failures or defects in our data collection, mining, analysis and storage systems, including due to our reliance on external third-party providers for cloud computing services and data center hosting services, in a competitive market subject to close legal and regulatory scrutiny.
Any of the above described limitations could also harm our business and adversely impact our future results of operations.
−Removed: The third parties upon which we rely for access to data and revenue opportunities may implement technical restrictions that impede our access to such data and revenue opportunities, which could materially impact our business and results of operations.
+Added: T hird parties may implement technical restrictions that impede our access to data and revenue opportunities upon which we rely, which could materially impact our business and results of operations.
A substantial portion of the data we rely on comes from our publisher partners and other third parties, including advertising exchange platforms (including supply-side platforms, or “SSPs”, such as Google’s Ad Manager).
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Our ability to successfully leverage such data and successfully generate revenue from such opportunities could be impacted by restrictions imposed by or on our publisher partners or other third parties, including restrictions on our ability to use or read cookies or other tracking features or our ability to use real-time bidding networks or other bidding networks.
−Removed: For example, in light of the GDPR, some SSPs imposed restrictions on our ability to bid on opportunities to serve ads.
+Added: For example, in light of GDPR, some SSPs imposed restrictions on our ability to bid on opportunities to serve ads.
Third-party publishers are responsible under GDPR for gathering necessary user consents and indicating to SSPs that Criteo has been approved by the applicable users.
−Removed: As part of their efforts to comply with their understanding of the requirements of the GDPR, which are subject to interpretation, certain SSPs that run advertising exchanges have required actions from such third party publishers with respect to such consents that appear to be stricter than what the regulations require.
+Added: As part of their efforts to comply with their understanding of the requirements of GDPR, which are subject to interpretation, certain SSPs that run advertising exchanges have required actions from such third party publishers with respect to such consents that appear stricter than regulations require.
Similarly, SSPs and other relevant third parties may take similar actions in response to any new legislation or regulatory developments or interpretations in the future, in response to perceived user preferences, or for other reasons.
If third parties on which we rely for data or opportunities to serve advertisements impose similar restrictions or are not able to comply with restrictions imposed by other ecosystem participants, we may lose the ability to access data, bid on opportunities, or purchase digital ad space, which could have a substantial impact on our revenue.
+Added: Failures in the systems and infrastructure supporting our solutions and operations, including as we scale our offerings, could significantly disrupt our operations and cause us to lose clients.
+Added: In addition to the optimal performance of Criteo AI Engine, our business relies on the continued and uninterrupted performance of our software and hardware infrastructures.
+Added: We currently place close to five billion advertisements per day and each of those advertisements can be placed in under 100 milliseconds.
+Added: Sustained or repeated system failures of our, or our third-party providers’, software or hardware infrastructures (such as massive and sustained data center or cloud service provider outages), which interrupt our ability to deliver advertisements quickly and accurately, our ability to serve and track advertisements, our ability to process consumers’ responses to those advertisements or otherwise disrupt our internal operations, could significantly reduce the attractiveness of our offering to clients and publishers, reduce our revenue or otherwise negatively impact our financial situation, impair our reputation and subject us to significant liability.
+Added: Additionally, if, for any reason, our arrangement with one or more data centers or cloud providers is terminated, we could experience difficulties and additional expense in arranging for new facilities and support, particularly given the current competitive nature of the data centers market at a worldwide scale, which involves high demands, low offers and strong pressure from providers to increase prices and diversify their client base.
+Added: Any steps we take to ensure business continuity and increase the security, reliability and redundancy of our systems supporting the Criteo technology or operations may be expensive and may not be successful in preventing system failures.
+Added: Similarly, advancements in machine learning approaches and other technology may require us to upgrade or replace essential hardware (such as graphics processing units), which could involve substantial resources and could be difficult to implement.
+Added: In addition, while we seek to maintain excess capacity to facilitate the rapid provision of new client deployments and the expansion of existing client deployments, we may need to increase data center hosting capacity, bandwidth, storage, power or other elements of our system architecture and our infrastructure as our client base and/or our traffic continues to grow.
+Added: The expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational and technical resources, with no assurance that the providers will honor such requests or that our business will increase.
+Added: Our existing systems may not be able to scale up in a manner satisfactory to our existing or prospective clients, and may not be adequately designed with the necessary reliability and redundancy of certain critical portions of our infrastructure to avoid performance delays or outages that could be harmful to our business.
+Added: Our failure to continuously upgrade or increase the reliability and redundancy of our infrastructure to meet the demands of a growing base of global clients and publishers could adversely affect the functioning and performance of our technology and could in turn affect our results of operations.
+Added: Finally, our systems and the systems of our third-party providers are vulnerable to damage and increased costs from a variety of sources, some of which are outside of our control, including telecommunications failures, natural disasters, terrorism, power outages, a variety of other possible outages affecting data centers, increases in the price of energy needed to power and cool data centers, a decision to close any data center or the facilities of any other third-party provider without adequate notice, and malicious human acts, including hacking, computer viruses, malware/ransomware and other security breaches.
+Added: Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target.
+Added: As a result, we may be unable to anticipate some of these techniques or to implement adequate preventive measures.
+Added: If we are unable to prevent system failures, the functioning and performance of our solutions could suffer, which in turn could interrupt our business and harm our results of operations.
Our business involves the use, transmission and storage of personal data and confidential information, and the failure to properly safeguard such information could result in significant reputational harm and monetary damages.
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Security breaches could expose us to unauthorized disclosure of this information, litigation and possible liability, as well as damage to our relationships with our clients and publishers.
−Removed: If our security measures are breached as a result of third-party action, employee or contractor error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to our data or the data of consumers, our clients, publishers, employees or other third parties, our reputation could be damaged, our business may suffer and we could incur significant liability.
−Removed: Our industry is prone to cyber-attacks by third parties seeking unauthorized access to our data or users’ data or to disrupt our ability to provide service.
+Added: If our security measures are breached as a result of third-party action, employee or contractor error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to such data, our reputation could be damaged, our business may suffer and we could incur significant liability.
+Added: Our industry is prone to cyber-attacks by third parties seeking unauthorized access to our data or users’ data or to disrupt our ability to provide services.
As a result of our prominence, the size of our user base, and the types and volume of personal data on our systems, we believe that we are a particularly attractive target for such breaches and attacks.
−Removed: Any failure to prevent or mitigate security breaches and improper access to or disclosure of our data or user data, including personal information and intellectual property, or information from marketers, could result in the loss or misuse of such data, which could harm our business and reputation and diminish our competitive position.
−Removed: In addition, computer malware/ransomware, viruses, unauthorized access or system compromises and hacking by sophisticated actors have become more prevalent in our industry.
+Added: Any failure to prevent or mitigate security breaches and improper access to or disclosure of our data or user data, including personal information, trade secrets and intellectual property, or information from marketers, could result in the loss or misuse of such data, which could harm our business and reputation and diminish our competitive position.
+Added: In addition, computer malware/ransomware, viruses, unauthorized access or system compromises and hacking by sophisticated actors, including potential attacks from nation-state actors, have become more prevalent in our industry.
Our products embed open source software.
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In addition, the perpetrators of such activity often are very sophisticated, and can include foreign governments and other parties with significant resources at their disposal.
−Removed: Cyber-attacks continue to evolve in sophistication and volume, and inherently may be difficult to detect for long periods of time.
−Removed: Although we have developed systems and processes that are designed to protect our data and user data, to prevent data loss, and to prevent or detect security breaches, such measures have not provided, and cannot be expected to provide, absolute security, and we may incur significant costs in protecting against and remediating cyber-attacks.
+Added: Cyber-attacks continue to constantly evolve in sophistication and volume, and inherently may be difficult to anticipate and detect for long periods of time.
+Added: Although we have developed systems and processes that are designed to protect data, and to prevent or detect security breaches, such measures have not provided, and cannot be expected to provide, absolute security, and we may incur significant costs in protecting against and remediating cyber-attacks.
We may also have to expend considerable resources on determining the nature and extent of such attacks.
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Additionally, third parties may attempt to fraudulently induce employees, consumers, our clients, our publishers or third-party providers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our data, our clients’ data or our publishers’ data, which could result in significant legal and financial exposure and a loss of confidence in the security of our offering and, ultimately, harm to our future business prospects.
−Removed: A party who is able to compromise the security of our facilities, including our data centers or office facilities, or any device, such as a smartphone or laptop, connected to our systems could misappropriate our proprietary information or the proprietary information of consumers, our clients and/or our publishers, or cause interruptions or malfunctions in our operations or those of our clients and/or publishers.
+Added: A party who is able to compromise the security of our facilities, including our data centers or office facilities, or any device, such as a smartphone or laptop, connected to our systems could misappropriate our, our clients’, our publishers’ or consumers’ proprietary information, or cause interruptions or malfunctions in our operations or those of our clients and/or publishers.
We have expended significant resources to protect against such threats and to alleviate problems caused by breaches in security and may have to expend additional resources for such purposes in the future.
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As a result, we may suffer significant legal, reputational, or financial exposure, which could adversely affect our business and results of operations.
−Removed: Failures in the systems and infrastructure supporting our solutions and operations, including as we scale our offerings, could significantly disrupt our operations and cause us to lose clients.
−Removed: In addition to the optimal performance of Criteo AI Engine, our business relies on the continued and uninterrupted performance of our software and hardware infrastructures.
−Removed: We currently place close to five billion advertisements per day and each of those advertisements can be placed in under 100 milliseconds.
−Removed: Sustained or repeated system failures of our software or hardware infrastructures (such as massive and sustained data center outages) or of the software or hardware infrastructures of our third-party providers, which interrupt our ability to deliver advertisements quickly and accurately, our ability to serve and track advertisements, our ability to process consumers’ responses to those advertisements or otherwise disrupt our internal operations, could significantly reduce the attractiveness of our offering to clients and publishers, reduce our revenue or otherwise negatively impact our financial situation, impair our reputation and subject us to significant liability.
−Removed: Additionally, if, for any reason, our arrangement with one or more data centers is terminated, we could experience additional expense in arranging for new facilities and support.
−Removed: Any steps we take to increase the security, reliability and redundancy of our systems supporting the Criteo technology or operations may be expensive and may not be successful in preventing system failures.
−Removed: Similarly, advancements in machine learning approaches and other technology may require us to upgrade or replace essential hardware (such as graphics processing units), which could involve substantial resources and could be difficult to implement.
−Removed: In addition, while we seek to maintain excess capacity to facilitate the rapid provision of new client deployments and the expansion of existing client deployments, we may need to increase data center hosting capacity, bandwidth, storage, power or other elements of our system architecture and our infrastructure as our client base and/or our traffic continues to grow.
−Removed: The expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational and technical resources, with no assurance our business will increase.
−Removed: Our existing systems may not be able to scale up in a manner satisfactory to our existing or prospective clients, and may not be adequately designed with the necessary reliability and redundancy of certain critical portions of our infrastructure to avoid performance delays or outages that could be harmful to our business.
−Removed: Our failure to continuously upgrade or increase the reliability and redundancy of our infrastructure to meet the demands of a growing base of global clients and publishers could adversely affect the functioning and performance of our technology and could in turn affect our results of operations.
−Removed: Finally, our systems and the systems of our third-party providers are vulnerable to damage from a variety of sources, some of which are outside of our control, including telecommunications failures, natural disasters, terrorism, power outages, a variety of other possible outages affecting data centers, a decision to close any data center or the facilities of any other third-party provider without adequate notice, and malicious human acts, including hacking, computer viruses, malware/ransomware and other security breaches.
−Removed: Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target.
−Removed: As a result, we may be unable to anticipate some of these techniques or to implement adequate preventive measures.
−Removed: If we are unable to prevent system failures, the functioning and performance of our solutions could suffer, which in turn could interrupt our business and harm our results of operations.
If we are unable to protect our proprietary information or other intellectual property, our business could be adversely affected.
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Furthermore, there is always the possibility, despite our efforts, that the scope of the protection gained will be insufficient or that an issued patent may be deemed invalid or unenforceable.
−Removed: Breaches of the security of our data center systems and infrastructure or other IT resources could also result in the exposure of our proprietary information.
+Added: Breaches of the security of our information system, our third-party providers’ information system or other IT resources could also result in the exposure of our proprietary information.
Additionally, our trade secrets may be independently developed by competitors.
7 unchanged sentences
Our success depends, in part, upon non-infringement of intellectual property rights owned by others and being able to resolve claims of intellectual property infringement or misappropriation without major financial expenditures or adverse consequences.
−Removed: From time to time, we may be the subject of claims that our solutions and underlying technology infringe or violate the intellectual property rights of others, particularly as we expand the scope and complexity of our business.
−Removed: Regardless of whether claims that we are infringing patents or other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend, and the outcome of any litigation is inherently uncertain.
+Added: From time to time, we may be the subject of claims that our services, solutions and underlying technology infringe or violate the intellectual property rights of others, particularly as we expand the scope and complexity of our business.
+Added: Regardless of whether claims that we are infringing trademarks, patents or other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend, and the outcome of any litigation is inherently uncertain.
Some of our competitors have substantially greater resources than we do and are able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could.
−Removed: Claims that we are infringing patents or other intellectual property rights could subject us to significant liabilities for monetary damages, interfere with or delay our development, commercialization or provision of our offerings on acceptable terms, harm our reputation or require us to make technology or branding changes to our offerings.
−Removed: In addition, we may be exposed to claims that the content contained in advertising campaigns violates the intellectual property or other rights of third parties.
+Added: Claims that we are infringing trademarks, patents or other intellectual property rights could subject us to significant liabilities for monetary damages, interfere with or delay our development, commercialization or provision of our offerings on acceptable terms, harm our reputation or require us to make technology or branding changes to our offerings.
+Added: In addition, we may be exposed to claims that the content contained in advertising campaigns violates the intellectual property or other rights of third parties and although we may have the right of recourse, this may be difficult or costly to enforce.
Such claims could be made directly against us or against the advertising agencies we work with, and media networks and exchanges and publishers from whom we purchase advertising inventory.
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Risks Related to Ownership of Our Shares and the ADSs and the Trading of the ADSs
−Removed: The market price for the ADSs have been and may continue to be volatile or may decline regardless of our operating performance.
+Added: The market price for the ADSs has been and may continue to be volatile or may decline regardless of our operating performance.
The trading price of the ADSs has significantly fluctuated, and is likely to continue to fluctuate, substantially.
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• changes in operating performance and stock market valuations of advertising technology or other technology companies, or those in our industry in particular;
−Removed: • investor sentiment with respect to our competitors, our business partners or our industry in general;
+Added: • investor sentiment with respect to our competitors, business partners or industry in general;
• price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
2 unchanged sentences
• developments in anticipated or new legislation or new or pending lawsuits or regulatory actions;
−Removed: • other events or factors, including those resulting from natural disasters or weather events, cyberattacks, pandemics, war, incidents of terrorism or other catastrophic events or responses to these events;
+Added: • other events or factors, including those resulting from economic recessions, natural disasters or weather events, cyberattacks, pandemics (including the COVID-19 pandemic), war (including the ongoing conflict between Russia and Ukraine), incidents of terrorism or other catastrophic events or responses to these events;
• any other risks identified in this Form 10-K.
11 unchanged sentences
We currently have a senior unsecured revolving credit facility under which we may borrow up to €407 million (or its equivalent in U.S.
−Removed: dollars or, subject to the satisfaction of certain conditions, other optional currencies) for general corporate purposes, including the funding of business combinations (the "General RCF").
+Added: dollars) for general corporate purposes, including the funding of business combinations (the "General RCF").
+Added: Maturity of this facility is in September 2027.
While we anticipate that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operations for at least the next 12 months, we may need to raise additional capital to fund operations in the future or to finance acquisitions.
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We currently intend to invest our future earnings, if any, to fund our growth, both organic and inorganic.
−Removed: In addition, we have used a portion of our available liquidity to repurchase our Company's shares in the past, and may continue to do so from time to time in the future.
+Added: In addition, we have used a portion of our available liquidity to repurchase our shares in the past (such repurchases being limited as per French law in scope (employee incentive purposes or external growth purposes only) and in amount (notably the Company cannot hold more than 10% of its share capital at any time)), and may continue to do so from time to time in the future.
In addition, to the extent any dividends are paid in the future, under French law, payment of such dividends may subject us to additional taxes, and the determination of whether we have been sufficiently profitable to pay dividends is made on the basis of our statutory financial statements prepared and presented in accordance with accounting principles generally accepted in France.
Therefore, we may be more restricted in our ability to declare dividends than companies not based in France.
−Removed: Please see the section entitled “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Taxation-French Tax Consequences” in Item 5 of Part II in this Form 10-K for further details on the limitations on our ability to declare and pay dividends and the taxes that may become payable by us if we elect to pay a dividend.
+Added: Please see the section entitled “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Taxation-French Tax Consequences” in Item 5 of Part II in this Form 10-K for further details on such taxes and limitations.
Finally, exchange rate fluctuations may affect the amount of euros that we are able to distribute, and the amount in U.S.
dollars that our shareholders receive upon the payment of cash dividends or other distributions we declare and pay in euros, if any.
−Removed: These factors could harm the value of the ADSs, and, in turn, the U.S.
−Removed: dollar proceeds that holders receive from the sale of the ADSs.
+Added: These factors could harm the value of ADSs, and, in turn, the U.S.
+Added: dollar proceeds that holders receive from the sale of ADSs.
Because you are not likely to receive any dividends on your ADSs for the foreseeable future, the success of an investment in ADSs will depend upon any future appreciation in their value.
2 unchanged sentences
The credit agreement for the General RCF contains, and documents governing our future indebtedness may contain, numerous covenants that limit the discretion of management with respect to certain business matters.
−Removed: These covenants place restrictions on, among other things, our ability and the ability of our subsidiaries to incur or guarantee additional indebtedness, pay dividends and make other distributions and restricted payments, make certain acquisitions and other investments, sell certain assets or engage in mergers, acquisitions and other business combinations, and create liens.
−Removed: Our credit agreement also requires, and documents governing our future indebtedness may require, us or our subsidiaries to meet certain financial ratios and tests in order to incur certain additional debt, make certain loans, acquisitions or other investments, or pay dividends or make other distributions or restricted payments.
+Added: These covenants place restrictions on, among other things, our ability and the ability of our subsidiaries to incur or guarantee additional indebtedness, pay dividends, sell certain assets or engage in mergers and acquisitions, and create liens.
+Added: Our credit agreement also requires, and documents governing our future indebtedness may require, us or our subsidiaries to meet certain financial ratios and tests.
To the extent we draw on the General RCF or incur new debt, the debt holders have rights senior to shareholders to make claims on our assets.
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• under French law, certain investments in any entity governed by a French law relating to certain strategic industries and activities (such as data processing, transmission or storage activities) by individuals or entities not French, not resident in France or controlled by entities not French or not resident in France are subject to prior authorization of the Minister of Economy (see the section entitled "Exchange Controls & Ownership by Non-French Residents" in Item 5 to Part II in this Form 10-K);
−Removed: • provisions of French law allowing the owner of 90% of the share capital or voting rights of a public company to force out the minority shareholders following a tender offer made to all shareholders are only applicable to companies listed on a stock exchange of the European Union and will therefore not be applicable to us;
−Removed: • a merger (i.e., in a French law context, a stock-for-stock exchange following which our company would be dissolved into the acquiring entity and our shareholders would become shareholders of the acquiring entity) of our company into a company incorporated outside of the European Union would require the unanimous approval of our shareholders;
−Removed: • a merger of our company into a company incorporated in the European Union would require the approval of our board of directors as well as a two-thirds majority of the votes held by the shareholders present, represented by proxy or voting by mail at the relevant extraordinary shareholders' meeting;
+Added: • provisions of French law allowing the owner of 90% of the share capital or voting rights of a public company to force out the minority shareholders following a tender offer made to all shareholders are only applicable to companies listed on a stock exchange of the EU and will therefore not be applicable to us;
+Added: • a merger (i.e., in a French law context, a stock-for-stock exchange following which our Company would be dissolved into the acquiring entity and our shareholders would become shareholders of the acquiring entity) of our Company into a company incorporated outside of the EU would require the unanimous approval of our shareholders;
+Added: • a merger of our Company into a company incorporated in the EU would require the approval of our board of directors as well as a two-thirds majority of the votes held by the shareholders present, represented by proxy or voting by mail at the relevant extraordinary shareholders' meeting;
• under French law, a cash merger is treated as a share purchase and would require the consent of each participating shareholder;
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jurisdictions.
−Removed: For example, in the performance of its duties, our board of directors is required by French law to consider the interests of our company, its shareholders, its employees and other stakeholders, rather than solely our shareholders and/or creditors.
+Added: For example, in the performance of its duties, our board of directors is required by French law to consider the interests of our Company while taking into consideration its social and environmental challenges, its shareholders, its employees and other stakeholders, rather than solely our shareholders and/or creditors.
It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder.
1 unchanged sentence
In periods of economic uncertainty, businesses may delay or reduce their spending on advertising, and we are exposed to the credit risk of some of our clients and customers, which could materially harm our business.
−Removed: General worldwide economic conditions have been significantly unstable in recent years, especially in the European Union where we generated 30% of our revenue for 2021.
−Removed: Unstable conditions make it difficult for our clients and us to accurately forecast and plan future business activities, and could cause our clients to reduce or delay their advertising spending with us.
−Removed: Historically, economic downturns, including conditions such as inflation, recessions, or other changes in economic conditions have resulted in overall reductions in advertising spending, and businesses may curtail spending both on advertising in general and on a solution such as ours.
+Added: Global economic conditions have been, and may continue to be, significantly unstable in recent years, especially in the EU where we generated 35% of our revenue for 2022.
+Added: Unstable conditions make it difficult for our clients and us to accurately forecast and plan future business activities, and could cause our clients to reduce or delay their advertising spending with us as consumers are spending less.
+Added: Worsening economic conditions and economic downturns, including conditions such as inflation, rising interest rates, recessions, or other changes in economic conditions may result in overall reductions in advertising spending, and businesses may curtail spending both on advertising in general and on a solution such as ours.
We cannot predict the timing, strength or duration of any economic slowdown or recovery.
−Removed: Any macroeconomic deterioration in the future could impair our revenue and results of operations.
−Removed: Furthermore, we have expanded our offerings to serve a larger number of smaller clients, and have expanded into emerging markets.
−Removed: Our changing client portfolio exposes us to additional credit risk, which could result in further exposure in the event of economic uncertainty or an economic downturn, including conditions such as inflation, recession, pandemic or other changes in economic conditions.
−Removed: Additionally, our exposure to credit risks relating to our financing activities may increase if our customers are adversely affected by periods of economic uncertainty, including inflation, recession, pandemic, or other changes in economic conditions, or a global economic downturn.
+Added: Any macroeconomic deterioration could impair our revenue and results of operations.
+Added: Our evolving client portfolio exposes us to varied payment terms and additional credit risk, which could result in further exposure in the event of economic uncertainty or an economic downturn, including conditions such as inflation, rising interest rates, recession, pandemic or other changes in economic conditions.
+Added: Additionally, our exposure to credit risks relating to our financing activities may increase if our customers are adversely affected by periods of economic uncertainty, including inflation, rising interest rates, recession, pandemic, or other changes in economic conditions, or a global economic downturn.
These losses have significantly impacted, and could continue to significantly impact, our operating results and financial condition.
If we fail to maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of the ADSs may, therefore, be adversely impacted.
−Removed: As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control.
−Removed: In addition, we are required to submit a report by management to the Audit Committee and external auditors on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and our independent registered public accounting firm is required to attest to the effectiveness of our internal controls over financial reporting.
−Removed: If we identify material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or assert that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of the ADSs may be adversely impacted, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
−Removed: Our failure to maintain certain tax benefits applicable to French technology companies may adversely affect our results of operations.
+Added: As a public company, we are required to maintain internal controls over financial reporting (“ICFR”) and to report any material weaknesses in such internal control.
+Added: In addition, we are required to submit a report by management to the Audit Committee and external auditors on the effectiveness of our ICFR pursuant to Section 404 of the Sarbanes-Oxley Act (“SOX”) and our independent registered public accounting firm is required to attest to the effectiveness of our ICFR.
+Added: If we identify material weaknesses in our ICFR, if we are unable to comply with the requirements of Section 404 of SOX in a timely manner or assert that our ICFR are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our ICFR when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of ADSs may be
+Added: adversely impacted, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
+Added: Our failure to maintain certain tax regimes applicable to French technology companies may adversely affect our results of operations.
As a French technology company, we have benefited from certain tax advantages, including, for example, a reduced tax rate in France on technology royalty income received from global subsidiaries and the French research tax credit ( crédit d’impôt recherche ), or CIR.
−Removed: The French tax authority may audit these tax incentives and challenge the benefits.
−Removed: Therefore, we could be liable for additional corporate tax, and penalties and interest related thereto, which could have a significant impact on our results of operations and future cash flows.
+Added: The French tax authority may audit these tax incentives and challenge all or part of their benefits.
+Added: In such a case, we could be liable for additional corporate tax, and penalties and interest related thereto, which could have a significant impact on our results of operations and future cash flows.
Furthermore, the tax laws may change, and could remove these incentives in the future or reduce their benefits.
−Removed: We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions as a result of new taxes or laws, or revised interpretations thereof, which may negatively affect our business.
+Added: Specifically, the Organization for Economic Co-operation and Development’s international Pillar 2 tax reform could trigger law changes and generate additional tax expense.
+Added: We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and new taxes or laws, or revised interpretations thereof, may negatively affect our results of operations.
As a multinational organization operating in multiple jurisdictions, we are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain.
1 unchanged sentence
For instance, several countries have proposed or enacted Digital Services Taxes ("DST"), many of which would apply to revenues derived from digital services.
−Removed: We will continue to assess the ongoing impact of DSTs that we pay in certain jurisdictions, as we anticipate that many jurisdictions may sign an agreement with the Organization for Economic Co-operation and Development in the coming years and that DSTs could be eliminated.
+Added: We will continue to assess the ongoing impact of DSTs that we pay in certain jurisdictions, as we anticipate that many jurisdictions may sign an agreement with the Organization for Economic Co-operation and Development in the coming years and that DSTs could be eliminated under Pillar 1.
+Added: We also monitor the impact of Pillar 2.
Holders of our ADSs may suffer adverse tax consequences if we are treated as a “passive foreign investment company” for U.S.
2 unchanged sentences
federal income tax purposes, for any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during such year) is attributable to assets that produce or are held for the production of passive income.
−Removed: For purposes of the above calculations, we will be treated as if we hold our proportionate share of the assets of, and receive directly our proportionate share of the income of, any other corporation in which we directly or indirectly own at least 25%, by value, of the shares of such corporation.
−Removed: Passive income includes, among other things, dividends, interest, certain non-active rents and royalties, net gains from the sale or exchange of property producing such income and net foreign currency gains.
−Removed: For this purpose, cash and assets readily convertible into cash are categorized as passive assets, and our goodwill and other unbooked intangibles are taken into account.
−Removed: Based on the value and composition of our assets, although not free from doubt, we do not believe we were a PFIC for the taxable year ended December 31, 2021, and we do not expect to be a PFIC in the current taxable year or the foreseeable future.
+Added: Passive income includes, among other things, dividends, interest, certain non-active rents and royalties, net gains from the sale or exchange of property producing such income and net foreign (non-U.S.) currency gains.
+Added: For this purpose, cash and assets readily convertible into cash are generally categorized as passive assets, subject to a limited working capital exception under proposed regulations.
+Added: Goodwill and other un-booked intangibles are taken into account and being characterized as either active or passive, as appropriate;
+Added: for example, our goodwill associated with active business activity is taken into account as a non-passive asset.
+Added: As the value of our assets for purposes of the above-mentioned PFIC asset test will generally be determined by reference to the market value of our ADSs, the determination of whether we will be or become a PFIC will depend in large part upon the market value of our ADSs, which we cannot control.
+Added: Accordingly, fluctuations in the market price of our ADSs may cause us to become a PFIC for the current taxable year or future taxable years.
+Added: The determination of whether we will be or become a PFIC will also depend, in part, upon the nature of our income and the valuation of our assets, including goodwill, which are subject to change from year to year.
+Added: Moreover, as we have valued our goodwill based on the market value of our ADSs, a decrease in the price of ADSs may also result in becoming a PFIC.
+Added: The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets.
+Added: For purposes of the above-mentioned PFIC tests, we will be treated as if we held our proportionate share of the assets and received directly our proportionate share of the income of any other corporation in which we directly or indirectly own at least 25% (by value) of the shares of such corporation.
+Added: Based on the value and composition of our assets, although not free from doubt, we do not believe we were a PFIC for the taxable year ended December 31, 2022, and we do not anticipate becoming a PFIC in the current taxable year or the foreseeable future.
The determination of whether we are a PFIC is a fact-intensive determination that must be made on an annual basis applying principles and methodologies that are in some circumstances unclear.
−Removed: Since a separate factual determination as to whether we are or have become a PFIC must be made each year (after the close of such year), we cannot assure you that we will not be or become a PFIC in the current year or any future taxable year.
−Removed: If we are a PFIC for any taxable year during which a U.S.
−Removed: holder holds ADSs, we would continue to be treated as a PFIC with respect to that U.S.
−Removed: person for such taxable year and, unless the U.S.
−Removed: person makes certain elections, for future years even if we cease to be a PFIC.
+Added: Since a separate factual determination as to whether we are or have become a PFIC must be made each year (after the close of such year), we cannot assure that we will not be or become a PFIC in the current year or any future taxable year.
+Added: If we are to be classified as a PFIC for any taxable year during which a U.S.
+Added: Holder 1 holds our ADSs, we would continue to be treated as a PFIC with respect to that U.S.
+Added: Holder for such taxable year and, unless the U.S.
+Added: Holder makes certain elections, for future years even if we cease to be a PFIC.
Holder may be subject to adverse tax consequences, including (1) the treatment of all or a portion of any gain on disposition of our ADSs as ordinary income (and therefore ineligible for the preferential rates that apply to capital gains with respect to non-corporate U.S.
5 unchanged sentences
Holders—Passive Foreign Investment Company, or PFIC, Rules” in our Annual Report.
−Removed: person is treated as owning at least 10% of our ADSs, such person may be subject to adverse U.S.
+Added: Holder is treated as owning at least 10% of our ADSs, such person may be subject to adverse U.S.
federal income tax consequences.
−Removed: If a United States person is treated as owning (directly, indirectly, or constructively through attribution) at least 10% of the total value of our stock or at least 10% of the total combined voting power of all classes of our stock entitled to vote, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any).
−Removed: We do not believe we are currently a controlled foreign corporation.
−Removed: However, no assurances can be given that we are not a controlled foreign corporation or that we will not become a controlled foreign corporation in the future.
+Added: Holder is treated as owning (directly, indirectly, or constructively through attribution) at least 10% of the total value of our stock or at least 10% of the total combined voting power of all classes of our stock entitled to vote, such person may be treated as a “United States shareholder” (“U.S.
+Added: Shareholder”) with respect to each “controlled foreign corporation” (“CFC”) in our group (if any).
+Added: entity treated as a corporation for U.S.
+Added: tax purposes will constitute a CFC if one or more such U.S.
+Added: Shareholders (generally defined as U.S.
+Added: persons that—directly, indirectly, or constructively through attribution—own at least 10% of the vote or value of the entity) own in the aggregate more than 50% of the entity’s total vote or value.
+Added: If we are classified as both a CFC and a PFIC (as defined above), we generally will not be treated as a PFIC with respect to those U.S.
+Added: Holders that are U.S.
+Added: Shareholders during the period in which we are a CFC.
+Added: We do not believe we are currently a CFC.
+Added: However, no assurances can be given that we are not a CFC or that we will not become a CFC in the future.
Because our group includes one or more U.S.
corporations, certain of our non-U.S.
−Removed: corporate subsidiaries could be treated as controlled foreign corporations (regardless of whether or not we are treated as a controlled foreign corporation).
−Removed: shareholder of a controlled foreign corporation may be required to report annually and include in its U.S.
+Added: corporate subsidiaries could be treated as CFCs (regardless of whether or not we are treated as a CFC).
+Added: Shareholder of a CFC may be required to report annually and include in its U.S.
taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments of earnings in U.S.
−Removed: property by controlled foreign corporations, regardless of whether we make any distributions to our shareholders.
−Removed: Subpart F income generally includes dividends, interest, certain non-active rents and royalties, gains from the sale of securities and income from certain transactions with related parties, and “global intangible low-taxed income” generally consists of net income of the controlled foreign corporation, other than Subpart F income and certain other types of income, in excess of certain thresholds.
+Added: property by CFCs, regardless of whether we make any distributions to our shareholders.
+Added: Subpart F income generally includes dividends, interest, certain non-active rents and royalties, gains from the sale of securities and income from certain transactions with related parties, and “global intangible low-taxed income” generally consists of net income of the CFC, other than Subpart F income and certain other types of income, in excess of certain thresholds.
In addition, a U.S.
−Removed: shareholder that realizes gain from the sale or exchange of shares in a controlled foreign corporation may be required to classify a portion of such gain as dividend income rather than capital gain.
−Removed: If we are classified as both a controlled foreign corporation and a PFIC (as discussed above), we generally will not be treated as a PFIC with respect to those U.S.
−Removed: holders that are U.S.
−Removed: shareholders during the period in which we are a controlled foreign corporation.
+Added: shareholder that realizes gain from the sale or exchange of shares in a CFC may be required to classify a portion of such gain as dividend income rather than capital gain.
Failure to comply with such reporting requirements could result in adverse tax effects for U.S.
1 unchanged sentence
An individual that is a U.S.
−Removed: shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a U.S.
+Added: Shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a U.S.
Shareholder that is a U.S.
−Removed: The determinations of controlled foreign corporation status and U.S.
+Added: Holder is a beneficial owner of our ADSs and is:
+Added: (i) an individual who is a citizen or resident of the United States for U.S.
+Added: federal income tax purposes;
+Added: (ii) a corporation, or other entity treated as an association taxable as a corporation for U.S.
+Added: federal income tax purposes, created in, or organized under the law of the United States, any state thereof or the District of Columbia;
+Added: (iii) an estate the income of which is includible in gross income for U.S.
+Added: federal income tax purposes regardless of its source;
+Added: or (iv) a trust (A) the administration of which is subject to the primary supervision of a U.S.
+Added: court and which has one or more U.S.
+Added: persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S.
+Added: person under the U.S.
+Added: Internal Revenue Code of 1986 (as amended) .
+Added: The determinations of CFC status and U.S.
Shareholder status are complex and includes attribution rules, the application of which are not entirely certain.
We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S.
−Removed: subsidiaries is treated as a controlled foreign corporation or whether any investor is a U.S.
+Added: subsidiaries is treated as a CFC or whether any investor is a U.S.
Shareholder, or that we will furnish to any U.S.
Shareholders information that may be necessary to comply with the aforementioned obligations.
−Removed: investor should consult its advisors regarding the potential application of these rules to an investment in our ADSs.
+Added: Holder should consult its advisors regarding the potential application of these rules to an investment in our ADSs.
Unresolved Staff Comments
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.