Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2018	Jan. 25, 2019	Jun. 30, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	EBAY INC
Entity Trading Symbol	EBAY
Entity Central Index Key	0001065088
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filer	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		914,880,451
Entity Public Float			$ 33,679,134,490
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false

CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 2,202	$ 2,120
Short-term investments	2,713	3,743
Accounts receivable, net	712	696
Other current assets	1,499	1,185
Total current assets	7,126	7,744
Long-term investments	3,778	6,331
Property and equipment, net	1,597	1,597
Goodwill	5,160	4,773
Intangible assets, net	92	69
Deferred tax assets	4,792	5,199
Other assets	274	273
Total assets	22,819	25,986
Current liabilities:
Short-term debt	1,546	781
Accounts payable	286	330
Accrued expenses and other current liabilities	2,335	2,134
Deferred revenue	170	137
Income taxes payable	117	177
Total current liabilities	4,454	3,559
Deferred tax liabilities	2,925	3,424
Long-term debt	7,685	9,234
Other liabilities	1,474	1,720
Total liabilities	16,538	17,937
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.001 par value; 3,580 shares authorized; 915 and 1,029 shares outstanding	2	2
Additional paid-in capital	15,716	15,293
Treasury stock at cost, 763 and 632 shares	(26,394)	(21,892)
Retained earnings	16,459	13,929
Accumulated other comprehensive income	498	717
Total stockholders' equity	6,281	8,049
Total liabilities and stockholders' equity	$ 22,819	$ 25,986

CONSOLIDATED BALANCE SHEET (Parentheticals) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Common stock - par value (in usd per share)	$ 0.001	$ 0.001
Common stock - shares authorized	3,580,000,000	3,580,000,000
Common stock - shares outstanding	915,000,000	1,029,000,000
Treasury stock - shares	763,000,000	632,000,000

CONSOLIDATED STATEMENT OF INCOME - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Statement [Abstract]
Net revenues	$ 10,746	$ 9,927	$ 9,298
Cost of net revenues	2,382	2,221	2,004
Gross profit	8,364	7,706	7,294
Operating expenses:
Sales and marketing	3,391	2,878	2,691
Product development	1,285	1,224	1,114
General and administrative	1,131	1,030	899
Provision for transaction losses	286	272	231
Amortization of acquired intangible assets	49	38	34
Total operating expenses	6,142	5,442	4,969
Income from operations	2,222	2,264	2,325
Interest and other, net	496	11	1,326
Income from continuing operations before income taxes	2,718	2,275	3,651
Income tax benefit (provision)	(190)	(3,288)	3,634
Income (loss) from continuing operations	2,528	(1,013)	7,285
Income (loss) from discontinued operations, net of income taxes	2	(4)	(19)
Net income (loss)	$ 2,530	$ (1,017)	$ 7,266
Income (loss) per share - basic:
Continuing operations (in usd per share)	$ 2.58	$ (0.95)	$ 6.43
Discontinued operations (in usd per share)	0	0	(0.02)
Net income (loss) per share - basic (in usd per share)	2.58	(0.95)	6.41
Income (loss) per share - diluted:
Continuing operations (in usd per share)	2.55	(0.95)	6.37
Discontinued operations (in usd per share)	0	0	(0.02)
Net income (loss) per share - diluted (in usd per share)	$ 2.55	$ (0.95)	$ 6.35
Weighted average shares:
Basic (in shares)	980	1,064	1,133
Diluted (in shares)	991	1,064	1,144

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 2,530	$ (1,017)	$ 7,266
Other comprehensive income (loss), net of reclassification adjustments:
Foreign currency translation adjustment	(286)	978	(185)
Unrealized gains (losses) on investments, net	(41)	(66)	(794)
Tax benefit (expense) on unrealized gains (losses) on investments, net	10	23	314
Unrealized gains (losses) on hedging activities, net	125	(111)	18
Tax benefit (expense) on unrealized gains (losses) on hedging activities, net	(27)	17	(3)
Other comprehensive income (loss), net of tax	(219)	841	(650)
Comprehensive income (loss)	$ 2,311	$ (176)	$ 6,616

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions	Total	Common stock	Additional paid-in capital	Treasury stock at cost	Retained earnings	Accumulated other comprehensive income (loss)
Stockholders' equity, beginning of period at Dec. 31, 2015		$ 2	$ 14,538	$ (16,203)	$ 7,713	$ 526
Common stock, beginning of year (in shares) at Dec. 31, 2015		1,184
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued		$ 0
Common stock issued (in shares)		22
Common stock repurchased/forfeited		$ 0
Common stock repurchased/forfeited (in shares)		(119)
Common stock and stock-based awards issued			102
Tax withholdings related to net share settlements of restricted stock awards and units			(121)
Stock-based compensation			416
Stock-based awards tax impact			5
Other			(33)
Common stock repurchased				(3,002)
Net income (loss)	$ 7,266				7,266
Distribution of PayPal					(20)
Change in unrealized gains (losses) on investments	(794)					(794)
Change in unrealized gains (losses) on derivative instruments						18
Foreign currency translation adjustment						(185)
Tax benefit (provision) on above items						311
Common stock, end of period (in shares) at Dec. 31, 2016		1,087
Stockholders' equity, end of period at Dec. 31, 2016	10,526	$ 2	14,907	(19,205)	14,946	(124)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of accounting change					(13)
Common stock issued		$ 0
Common stock issued (in shares)		24
Common stock repurchased/forfeited		$ 0
Common stock repurchased/forfeited (in shares)		(82)
Common stock and stock-based awards issued			120
Tax withholdings related to net share settlements of restricted stock awards and units			(219)
Stock-based compensation			484
Stock-based awards tax impact			0
Other			1
Common stock repurchased				(2,687)
Net income (loss)	(1,017)				(1,017)
Distribution of PayPal					0
Change in unrealized gains (losses) on investments	$ (66)					(66)
Change in unrealized gains (losses) on derivative instruments						(111)
Foreign currency translation adjustment						978
Tax benefit (provision) on above items						40
Common stock, end of period (in shares) at Dec. 31, 2017	1,029	1,029
Stockholders' equity, end of period at Dec. 31, 2017	$ 8,049	$ 2	15,293	(21,892)	13,929	717
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of accounting change					0
Common stock issued		$ 0
Common stock issued (in shares)		17
Common stock repurchased/forfeited		$ 0
Common stock repurchased/forfeited (in shares)	(131)	(131)
Common stock and stock-based awards issued			109
Tax withholdings related to net share settlements of restricted stock awards and units			(225)
Stock-based compensation			538
Stock-based awards tax impact			0
Other			1
Common stock repurchased	$ (4,500)			(4,502)
Net income (loss)	2,530				2,530
Distribution of PayPal					0
Change in unrealized gains (losses) on investments	$ (41)					(41)
Change in unrealized gains (losses) on derivative instruments						125
Foreign currency translation adjustment						(286)
Tax benefit (provision) on above items						(17)
Common stock, end of period (in shares) at Dec. 31, 2018	915	915
Stockholders' equity, end of period at Dec. 31, 2018	$ 6,281	$ 2	$ 15,716	$ (26,394)	16,459	$ 498
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of accounting change					$ 0

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities:
Net income (loss)	$ 2,530	$ (1,017)	$ 7,266
(Income) loss from discontinued operations, net of income taxes	(2)	4	19
Adjustments:
Provision for transaction losses	286	272	231
Depreciation and amortization	696	676	682
Stock-based compensation	538	483	416
(Gain) Loss on investments, net	(572)	49	(1,236)
Gain on sale of business	0	(167)	0
Deferred income taxes	(153)	1,728	(4,556)
Change in fair value of warrant	(104)	0	0
Other	19	0	(15)
Changes in assets and liabilities, net of acquisition effects
Accounts receivable	(98)	(195)	(48)
Other current assets	(143)	(148)	23
Other non-current assets	108	19	94
Accounts payable	(47)	19	(28)
Accrued expenses and other liabilities	(437)	206	(130)
Deferred revenue	33	8	4
Income taxes payable and other tax liabilities	7	1,209	105
Net cash provided by continuing operating activities	2,661	3,146	2,827
Net cash used in discontinued operating activities	(3)	0	(1)
Net cash provided by operating activities	2,658	3,146	2,826
Cash flows from investing activities:
Purchases of property and equipment	(651)	(666)	(626)
Purchases of investments	(28,115)	(14,599)	(11,212)
Maturities and sales of investments	30,901	14,520	10,063
Equity investment in Flipkart	0	(514)	0
Proceeds from sale of equity investment in Flipkart	1,029	0	0
Acquisitions, net of cash acquired	(302)	(34)	(212)
Other	32	(2)	(30)
Net cash provided by (used in) investing activities	2,894	(1,295)	(2,017)
Cash flows from financing activities:
Proceeds from issuance of common stock	109	120	102
Repurchases of common stock	(4,502)	(2,746)	(2,943)
Tax withholdings related to net share settlements of restricted stock awards and units	(225)	(219)	(121)
Proceeds from issuance of long-term debt, net	0	2,484	2,216
Repayment of debt	(750)	(1,452)	(20)
Other	(30)	29	22
Net cash used in financing activities	(5,398)	(1,784)	(744)
Effect of exchange rate changes on cash and cash equivalents	(75)	238	(90)
Net increase (decrease) in cash, cash equivalents and restricted cash	79	305	(25)
Cash, cash equivalents and restricted cash at beginning of period	2,140	1,835	1,860
Cash, cash equivalents and restricted cash of continuing operations at end of period	2,219	2,140	1,835
Cash paid for:
Interest	314	285	220
Income taxes	597	308	492
Noncash investing activities:
Relinquishment of equity method investment	266	0	0
Sale of business in exchange for ownership interest in Flipkart	$ 0	$ 211	$ 0

The Company and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

The Company and Summary of Significant Accounting Policies

The Company

eBay Inc. is a global commerce leader, which includes our Marketplace, StubHub and Classifieds platforms. Our Marketplace platforms include our online marketplace located at www.ebay.com, its localized counterparts and the eBay suite of mobile apps. Our StubHub platforms include our online ticket platform located at www.stubhub.com, its localized counterparts and the StubHub mobile apps. Our Classifieds platforms include a collection of brands such as Mobile.de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen and others.

When we refer to “we,” “our,” “us” or “eBay” in this document, we mean the current Delaware corporation (eBay Inc.) and its California predecessor, as well as all of our consolidated subsidiaries, unless otherwise expressly stated or the context otherwise requires.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction losses, legal contingencies, income taxes, revenue recognition, stock-based compensation, investments, goodwill and the recoverability of intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

Principles of Consolidation and Basis of Presentation

The accompanying financial statements are consolidated and include the financial statements of eBay Inc., our wholly and majority-owned subsidiaries and variable interest entities (“VIE”) where we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Minority interests are recorded as a noncontrolling interest. A qualitative approach is applied to assess the consolidation requirement for VIEs. Investments in entities where we hold at least a 20% ownership interest and have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting. For such investments, our share of the investees’ results of operations is included in interest and other, net and our investment balance is included in long-term investments. Investments in entities where we hold less than a 20% ownership interest are generally accounted for as equity investments to be measured at fair value or, under an election, at cost if it does not have readily determinable fair value, in which case the carrying value would be adjusted upon the occurrence of an observable price change or impairment.

Certain prior period amounts have been reclassified on our consolidated financial statements to conform with current year presentation. We have evaluated all subsequent events through the date the consolidated financial statements were issued.

Significant Accounting Policies

Revenue recognition

We recognize revenue when we transfer control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recognized net of any taxes collected, which are subsequently remitted to governmental authorities.

Net transaction revenues

Our net transaction revenues primarily include final value fees, feature fees, including fees to promote listings, and listing fees from sellers in our Marketplace and final value fees from sellers and buyers on our StubHub platforms. Our net transaction revenues also include store subscription and other fees often from large enterprise sellers. Our net transaction revenues are reduced by incentives provided to our customers.

We identified one performance obligation to sellers on our Marketplace platform, which is to connect buyers and sellers on our secure and trusted Marketplace platforms. Final value fees are recognized when an item is sold on a Marketplace platform, satisfying this performance obligation. There may be additional services available to Marketplace sellers, mainly to promote or feature listings, that are not distinct within the context of the contract. Accordingly, feature and listing fees associated with these services are recognized when the single performance obligation is satisfied when an item is sold, or when the contract expires. On our StubHub platform, our performance obligation extends to both buyers and sellers. We made the policy election to consider delivery of tickets in our StubHub platform to be fulfillment activities and, consequently, the performance obligation is satisfied, and final value fees are recognized, upon payment to sellers.

Store subscription and other nonstandard listing contracts may contain multiple performance obligations, including discounts on future services. Determining whether performance obligations should be accounted for separately or combined may require significant judgment. The transaction price is allocated to each performance obligation based on its stand-alone selling price (“SSP”). In instances where SSP is not directly observable, we generally estimate selling prices based on when they are sold to customers of a similar nature and geography. These estimates are generally based on pricing strategies, market factors, strategic objectives and observable inputs. Store subscription revenues are recognized over the subscription period, and discounts offered through store subscription or nonstandard listing contracts are recognized when the options are exercised or when the options expire.

Further, to drive traffic to our platforms, we provide incentives to buyers and sellers in various forms including discounts on fees, discounts on items sold, coupons and rewards. Evaluating whether a promotion or incentive is a payment to a customer may require significant judgment. Promotions and incentives which are consideration payable to a customer are recognized as a reduction of revenue at the later of when revenue is recognized or when we pay or promise to pay the incentive. Promotions and incentives to most buyers on our Marketplace platforms, to whom we have no performance obligation, are recognized as sales and marketing expense. In addition, we may provide credits to customers when we refund certain fees. Credits are accounted for as variable consideration at contract inception when estimating the amount of revenue to be recognized when a performance obligation is satisfied to the extent that it is probable that a significant reversal of revenue will not occur and updated as additional information becomes available.

Marketing services and other revenues

Our marketing services and other revenues are derived principally from the sale of advertisements, classifieds fees, and revenue sharing arrangements. Advertising revenue is derived principally from the sale of online advertisements which are based on “impressions” (i.e., the number of times that an advertisement appears in pages viewed by users of our platforms) or “clicks” (which are generated each time users on our platforms click through our advertisements to an advertiser’s designated website) delivered to advertisers. We use the output method and apply the practical expedient to recognize advertising revenue in the amount to which we have a right to invoice. For contracts with target advertising commitments with rebates, estimated payout is accounted for as a variable consideration to the extent it is probable that a significant reversal of revenue will not occur.

We generate net revenues related to fees for listing items on our Classifieds platforms, which are recognized over the estimated period of the classifieds listing and fees to feature the listing that are recognized over the feature

period or a point in time depending on the nature of the feature purchased. Discounts offered through purchase of packages of multiple services are allocated based on the SSP of each respective feature.

Revenues related to revenue sharing arrangements are recognized based on whether we are the principal and are responsible for fulfilling the promise to provide the specified services or whether we are an agent arranging for those services to be provided by our partners. Determining whether we are a principal or agent in these contracts may require significant judgment. If we are the principal, we recognize revenue in the gross amount of consideration received from the customer, whereas if we are an agent, we recognize revenue net of the consideration due to our partners at a point in time when the services are provided. Our most significant revenue share arrangements are with shipping service providers. We are primarily acting as an agent in these contracts and revenues are recognized at a point in time when we have satisfied our promise of connecting the shipping service provider to our customer.

Refer to “Note 5 - Segments” for further information, including revenue by types and geographical markets.

Contract balances

Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represents amounts invoiced and revenue recognized prior to invoicing when we have satisfied our performance obligation and have the unconditional right to payment. The allowance for doubtful accounts and authorized credits is estimated based upon our assessment of various factors including historical experience, the age of the accounts receivable balances, current economic conditions and other factors that may affect our customers’ ability to pay. The allowance for doubtful accounts and authorized credits was $106 million and $102 million as of December 31, 2018 and December 31, 2017, respectively.

Deferred revenue consists of fees received related to unsatisfied performance obligations at the end of the period. Due to the generally short-term duration of contracts, the majority of the performance obligations are satisfied in the following reporting period. The amount of revenue recognized for the twelve months ended December 31, 2018 that was included in the deferred revenue balance at the beginning of the period was $96 million. The amount of revenue recognized for the twelve months ended December 31, 2017 that was included in the deferred revenue balance at the beginning of the period was $88 million.

Internal use software and platform development costs

Direct costs incurred to develop software for internal use and platform development costs are capitalized and amortized over an estimated useful life of one to five years. During the years ended December 31, 2018 and 2017, we capitalized costs, primarily related to labor and stock-based compensation, of $147 million and $140 million, respectively. Amortization of previously capitalized amounts was $160 million, $156 million and $149 million for 2018, 2017 and 2016, respectively. Costs related to the design or maintenance of internal use software and platform development are expensed as incurred.

Advertising expense

We expense the costs of producing advertisements at the time production occurs and expense the cost of communicating advertisements in the period during which the advertising space or airtime is used, in each case as sales and marketing expense. Internet advertising expenses are recognized based on the terms of the individual agreements, which are generally over the greater of the ratio of the number of impressions delivered over the total number of contracted impressions, on a pay-per-click basis, or on a straight-line basis over the term of the contract. Advertising expense totaled $1.4 billion, $1.3 billion and $1.2 billion for the years ended December 31, 2018, 2017 and 2016, respectively.

Stock-based compensation

We have equity incentive plans under which we grant equity awards, including stock options, restricted stock units (“RSUs”), performance-based restricted stock units, and performance share units, to our directors, officers and employees. We primarily issue RSUs. We determine compensation expense associated with RSUs based on the fair value of our common stock on the date of grant. We determine compensation expense associated with stock options based on the estimated grant date fair value method using the Black-Scholes valuation model. We generally recognize compensation expense using a straight-line amortization method over the respective vesting period for awards that are ultimately expected to vest. Accordingly, stock-based compensation expense for 2018, 2017 and 2016 has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of actual option forfeitures. We recognize a benefit or provision from stock-based compensation in earnings as a component of income tax expense to the extent that an incremental tax benefit or deficiency is realized by following the ordering provisions of the tax law. In addition, we account for the indirect effects of stock-based compensation on the research tax credit and the foreign tax credit through our consolidated statement of income.

Provision for transaction losses

Provision for transaction losses consists primarily of losses resulting from our buyer protection programs, fraud and bad debt expense associated with our accounts receivable balance. Provisions for these items represent our estimate of actual losses based on our historical experience and many other factors including changes to our protection programs, the impact of regulatory changes as well as economic conditions.

Income taxes

We account for income taxes using an asset and liability approach, which requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns. The measurement of current and deferred tax assets and liabilities is based on provisions of enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. If necessary, the measurement of deferred tax assets is reduced by the amount of any tax benefits that are not expected to be realized based on available evidence.

We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

We accounted for the tax effects of The Tax Cuts and Jobs Act, enacted on December 22, 2017, on a provisional basis in our 2017 consolidated financial statements. We completed our accounting in the fourth quarter of 2018 within the one year measurement period from the enactment date.

Cash and cash equivalents

Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less when purchased and are primarily comprised of bank deposits and certificates of deposit.

Investments

Short-term investments, which may include marketable equity securities, time deposits, certificates of deposit, government bonds and corporate debt securities with original maturities of greater than three months but less than one year when purchased, are classified as available-for-sale and are reported at fair value using the specific identification method. Unrealized gains and losses related to equity securities are recognized in interest & other, net, with all other unrealized gains and losses reported as a component of other comprehensive income (loss), net of related estimated income tax provisions or benefits.

Long-term investments may include marketable government bonds and corporate debt securities, time deposits, certificates of deposit and equity investments. Debt securities are classified as available-for-sale and are reported at fair value using the specific identification method. Unrealized gains and losses on our available-for-sale debt securities are excluded from earnings and reported as a component of other comprehensive income (loss), net of related estimated income tax provisions or benefits.

Our equity investments are primarily investments in privately-held companies. Our consolidated results of operations include, as a component of interest and other, net, our share of the net income or loss of the equity investments accounted for under the equity method of accounting. Our share of investees’ results of operations is not significant for any period presented. Equity investments without readily determinable fair values are accounted for at cost, less impairment and adjusted for subsequent observable price changes obtained from orderly transactions for identical or similar investments issued by the same investee. Such changes in the basis of the equity investment are recognized in interest & other, net.

We assess whether an other-than-temporary impairment loss on our investments has occurred due to declines in fair value or other market conditions. With respect to our debt securities, this assessment takes into account the severity and duration of the decline in value, our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, and whether we expect to recover the entire amortized cost basis of the security (that is, whether a credit loss exists).

Property and equipment

Property and equipment are stated at historical cost less accumulated depreciation. Depreciation for equipment, buildings and leasehold improvements commences once they are ready for our intended use. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally, one to three years for computer equipment and software, up to thirty years for buildings and building improvements, the shorter of five years or the term of the lease for leasehold improvements and three years for furniture, fixtures and vehicles. Land is not depreciated.

Goodwill and intangible assets

Goodwill is tested for impairment at a minimum on an annual basis. Goodwill is tested for impairment at the reporting unit level. A qualitative assessment can be performed to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using income and market approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow method, a form of the income approach, uses expected future operating results and a market participant discount rate. The market approach uses comparable company prices and other relevant information generated by market transactions (either publicly traded entities or mergers and acquisitions) to develop pricing metrics to be applied to historical and expected future operating results of our reporting units. Failure to achieve these expected results, changes in the discount rate or market pricing metrics may cause a future impairment of goodwill at the reporting unit. We conducted our annual impairment test of goodwill as of August 31, 2018 and 2017 and determined that no adjustment to the carrying value of goodwill for any reporting units was required.

Intangible assets consist of purchased customer lists and user base, marketing related, developed technologies and other intangible assets, including patents and contractual agreements. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to five years. No significant residual value is estimated for intangible assets.

Impairment of long-lived assets

We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate. In 2018, 2017 and 2016, no impairment was noted.

Foreign currency

Most of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated into U.S. dollars using exchange rates prevailing at the balance sheet date, while revenues and expenses are translated at average exchange rates during the year. Gains and losses resulting from the translation of our consolidated balance sheet are recorded as a component of accumulated other comprehensive income.

Gains and losses from foreign currency transactions are recognized as interest and other, net.

Derivative instruments

We use derivative financial instruments, primarily forwards, options and swaps, to hedge certain foreign currency and interest rate exposures. We may also use other derivative instruments not designated as hedges, such as forwards to hedge foreign currency balance sheet exposures. We do not use derivative financial instruments for trading purposes.

We also entered into a warrant agreement in addition to a commercial agreement with a service provider that, subject to meeting certain conditions, entitles us to acquire a fixed number of shares up to 5% of the service provider’s fully diluted issued and outstanding share capital at a specific date. The warrant is accounted for as a derivative instrument under ASC Topic 815, Derivatives and Hedging.

See “Note 7 - Derivative Instruments” for a full description of our derivative instrument activities and related accounting policies.

Concentration of credit risk

Our cash, cash equivalents, accounts receivable and derivative instruments are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with financial institutions that management believes are of high credit quality. Our accounts receivable are derived from revenue earned from customers. In each of the years ended December 31, 2018, 2017 and 2016, no customer accounted for more than 10% of net revenues. Our derivative instruments expose us to credit risk to the extent that our counterparties may be unable to meet the terms of the agreements.

Recently Adopted Accounting Pronouncements

In 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to revenue recognition. This new standard replaces all current GAAP guidance on this topic and eliminates all industry-specific guidance. The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In 2016, the FASB issued several amendments to the standard, including principal versus agent considerations when another party is involved in providing goods or services to a customer and the application of identifying performance obligations. We adopted the standard effective January 1, 2018 using the full retrospective transition method and recast each prior reporting period presented. The cumulative adjustment to retained earnings as of January 1, 2016 was immaterial.

Under the new standard, we identified one performance obligation related to the core service offered to sellers on our Marketplace platform and believe additional services, mainly to promote or feature listings at the option of sellers, are not distinct within the context of the contract. Accordingly, certain fees paid by sellers for these services will be recognized when the single performance obligation is satisfied or when the contract expires resulting, in some cases, in a change in the timing of recognition. In addition, we made the policy election to consider delivery of tickets in our StubHub business to be fulfillment activities and, consequently, the performance obligation is considered to be satisfied upon payment to sellers. The impact of this policy election will allow an acceleration of revenue recognition for certain users. The total impact resulting from the change in timing of recognition for both the Marketplace and StubHub platforms was an immaterial net change in transaction revenue for both the twelve month periods ended December 31, 2017 and 2016, and an increase in deferred revenue of $20 million and $19 million as of December 31, 2017 and 2016, respectively.

Further, certain incentives, such as coupons and rewards provided to certain users from which we do not earn revenue within the context of the identified contract, of $363 million and $323 million for the twelve months ended December 31, 2017 and 2016, respectively, was recognized as sales and marketing expenses, which historically was recorded as a reduction of revenue.

Adoption of this guidance impacted our previously reported results as follows (in millions, except per share data):



	Year Ended December 31, 2017						Year Ended December 31, 2016
	As Reported			As Adjusted			As Reported		As Adjusted
Net revenues	$	9,567		$	9,927		$	8,979	$	9,298
Cost of net revenues	$	2,222		$	2,221		$	2,007	$	2,004
Sales and marketing	$	2,515		$	2,878		$	2,368	$	2,691
Net income (loss)	$	(1,016	)	$	(1,017	)	$	7,266	$	7,266

Net income (loss) per share - basic	$	(0.95	)	$	(0.95	)	$	6.41	$	6.41

Net income (loss) per share - diluted	$	(0.95	)	$	(0.95	)	$	6.35	$	6.35

In 2016, the FASB issued new guidance related to accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. In 2018, the FASB issued certain clarifications related to the application of the new guidance. We adopted this guidance in the first quarter of 2018 with no material impact on our consolidated financial statements at adoption. We anticipate that the standard will increase the volatility of our other income (expense), net, as a result of the remeasurement of equity investments.

In 2016, the FASB issued new guidance that clarifies the classification of certain cash receipts and cash payments in the statement of cash flows, including debt prepayment or extinguishment costs, settlement of contingent consideration arising from a business combination, insurance settlement proceeds, and distributions from certain equity method investees. Additionally, the FASB issued new guidance to include restricted cash with cash and cash equivalents when reconciling the beginning-of-the-period and end-of-the-period total amounts shown on the statement of cash flows. The new standards are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. We adopted this guidance in the first quarter of 2018 with no material impact on our consolidated financial statements at adoption.

In 2016, the FASB issued new guidance that requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This removes the exception to postpone recognition until the asset has been sold to an outside party. This standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, with early adoption permitted. It is required to be applied on a modified retrospective basis through a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We adopted this guidance in the first quarter of 2018 with no material impact on our consolidated financial statements at adoption.

In 2017, the FASB issued new guidance that narrows the application of when an integrated set of assets and activities is considered a business and provides a framework to assist entities in evaluating whether both an input and a substantive process are present to be considered a business. It is expected that the new guidance will reduce the number of transactions that would need to be further evaluated and accounted for as a business. This standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, with early adoption permitted. We adopted this guidance in the first quarter of 2018 with no material impact on our consolidated financial statements at adoption; however, adoption of the new guidance will impact management’s consideration of strategic investments.

In 2017, the FASB issued new guidance to clarify the scope and application of the sale or transfer of nonfinancial assets to noncustomers, including partial sales and also defines what constitutes an “in substance nonfinancial asset”

which can include financial assets. The new guidance eliminates several accounting differences between transactions involving assets and transactions involving businesses. Further, the guidance aligns the accounting for derecognition of a nonfinancial asset with that of a business. This standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. We adopted this guidance in the first quarter of 2018 with no material impact on our consolidated financial statements at adoption.

In 2017, the FASB issued new guidance to amend the scope of modification accounting for share-based payment arrangements. The amendments in the update provide guidance on types of changes to the terms or conditions of share-based payment awards would be required to apply modification accounting under ASC 718, Compensation-Stock Compensation. The amendments are effective for annual reporting periods beginning after December 15, 2017 with early adoption permitted. We adopted this guidance in the first quarter of 2018 with no material impact on our consolidated financial statements at adoption.

In 2017, the FASB issued new guidance to simplify the application of the hedge accounting guidance in current GAAP and improve the financial reporting of hedging relationships by allowing entities to better align its risk management activities and financial reporting for hedging relationships through changes to both designation and measurement for qualifying hedging relationships and the presentation of hedge results. Further, the new guidance allows more flexibility in the requirements to qualify and maintain hedge accounting. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods with early adoption permitted. We early adopted this guidance in the first quarter of 2018 with no material impact on our consolidated financial statements at adoption.

In 2018, the FASB issued new guidance that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act, eliminating the stranded tax effects resulting from the Tax Cuts and Jobs Act. However, the new guidance only applies to the tax effects resulting from the Tax Cuts and Jobs Act and does not change the underlying guidance to recognize the effect of a change in tax laws or rates in income from continuing operations. The amendments are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. We have elected to not reclassify the stranded tax effects resulting from the Tax Cut and Jobs Act to retained earnings. Accordingly, the standard does not have an impact on our consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In 2016, the FASB issued new guidance related to accounting for leases. The new guidance requires the recognition of right-of-use (“ROU”) assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. In 2018, the FASB also approved an amendment that would permit the option to adopt the new standard prospectively as of the effective date, without adjusting comparative periods presented. The new standard will be effective for us beginning January 1, 2019. In preparation for the adoption of the new standard, we have implemented internal controls and a new lease accounting information system to enable the preparation of financial information. We will elect the optional transition approach to not apply the new lease standard in the comparative periods presented and the package of practical expedients. We will also elect the practical expedient to not account for lease and non-lease components separately for data center operating leases. We expect adoption of the standard will result in the recognition of ROU assets and lease liabilities for operating leases of approximately $700 million to $800 million at January 1, 2019, with the most significant impact from recognition of ROU assets and lease liabilities related to our office space, data center, fulfillment center and other corporate asset operating leases. The adoption of the new standard will not have a material impact on our consolidated statement of income, stockholders’ equity and cash flows.

In 2016, the FASB issued new guidance that requires credit losses on financial assets measured at amortized cost basis to be presented at the net amount expected to be collected, not based on incurred losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 is permitted. We are evaluating the impact of adopting this new accounting guidance on our consolidated financial statements.

In 2017, the FASB issued new guidance to simplify the subsequent measurement of goodwill by removing the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of goodwill to measure

impairment. Instead, any goodwill impairment will equal the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Further, the guidance eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. This standard is effective for annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2019, with early adoption permitted for impairment tests performed after January 1, 2017. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In 2017, the FASB issued new guidance that will shorten the amortization period for certain callable debt securities held at a premium to the earliest call date to more closely align with expectations incorporated in market pricing. The new guidance will not impact debt securities held at a discount. Adoption of this standard will be made on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. This standard is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In 2018, the FASB issued new guidance to simplify the accounting for nonemployee share-based payment transactions by expanding the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under the new standard, most of the guidance on stock compensation payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. This standard is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In 2018, the FASB issued new guidance on a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor (i.e., a service contract). Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. This standard will be effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those fiscal years, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In 2018, the FASB issued guidance to permit use of the Overnight Index Swap (“OIS”) rate as a U.S. benchmark interest rate for hedge accounting purposes in addition to the UST, the London InterBank Offered Rate (“LIBOR”) swap rate, the OIS rate based on the Fed Funds Effective Rate, and the Securities Industry and Financial Market Association Municipal Swap Rate. This guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods. While we continue to assess the potential impact of this standard, we do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In 2018, the FASB issued new guidance to clarify the interaction between Collaborative Arrangements and Revenue from Contracts with Customers standards. The guidance (1) clarifies that certain transactions between collaborative arrangement participants should be accounted under revenue guidance; (2) adds unit of account guidance to the collaborative arrangement guidance to align with the revenue standard; and (3) clarifies presentation guidance for transactions with a collaborative arrangement participant that is not accounted for under the revenue standard. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual reporting periods, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

Net Income (loss) Per Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Net Income (loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and equity incentive awards is reflected in diluted net income (loss) per share by application of the treasury stock method. The calculation of diluted net income (loss) per share excludes all anti-dilutive common shares.

The following table presents the computation of basic and diluted net income (loss) per share (in millions, except per share amounts):



	Year Ended December 31,
	2018		2017			2016
Numerator:
Income (loss) from continuing operations	$	2,528	$	(1,013	)	$	7,285
Income (loss) from discontinued operations, net of income taxes	2		(4		)	(19		)
Net income (loss)	$	2,530	$	(1,017	)	$	7,266
Denominator:
Weighted average shares of common stock - basic	980		1,064			1,133
Dilutive effect of equity incentive awards	11		—			11
Weighted average shares of common stock - diluted	991		1,064			1,144
Income (loss) per share - basic:
Continuing operations	$	2.58	$	(0.95	)	$	6.43
Discontinued operations	—		—			(0.02		)
Net income (loss) per share - basic	$	2.58	$	(0.95	)	$	6.41
Income (loss) per share - diluted:
Continuing operations	$	2.55	$	(0.95	)	$	6.37
Discontinued operations	—		—			(0.02		)
Net income (loss) per share - diluted	$	2.55	$	(0.95	)	$	6.35
Common stock equivalents excluded from income per diluted share because their effect would have been anti-dilutive	12		46			8

Business Combinations

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Business Combinations

In 2018, we completed the acquisition of 100% of Giosis Pte. Ltd.’s (“Giosis”) Japan business, including the Qoo10.jp platform, in exchange for $306 million in cash and the relinquishment of our existing equity method investment in Giosis. We believe the acquisition allows us to offer Japanese consumers more inventory and grow our international presence. Refer to “Note 6 - Investments” for further details on the relinquishment of our equity method investment in Giosis’ non-Japanese business. The aggregate purchase consideration was allocated as follows (in millions):



	Giosis
Goodwill	$	532
Purchased intangible assets	91
Net liabilities	(50		)
Total	$	573

These allocations were prepared on a preliminary basis and changes to these allocations may occur as additional information becomes available. The goodwill recognized is primarily attributable to expected synergies and the assembled workforce of Giosis. We generally do not expect goodwill to be deductible for income tax purposes.

Acquisition activity in 2017 was immaterial.

During 2016, we completed six acquisitions – Cargigi Inc., Expertmaker, SalesPredict, Ticketbis, Ticket Utils and Corrigon Ltd. – for an aggregate purchase consideration of approximately $212 million in cash. We believe these acquisitions will help us build a better user experience, improve discoverability and grow our international presence.

The aggregate purchase consideration of our 2016 acquisitions was allocated as follows (in millions):



	Ticketbis			Other			Total
Purchased intangible assets	$	48		$	28		$	76
Goodwill	128			57			185
Net liabilities	(35		)	(14		)	(49		)
Total	$	141		$	71		$	212

These allocations have been prepared on a preliminary basis and changes to these allocations may occur as additional information becomes available. We generally do not expect goodwill to be deductible for income tax purposes.

Our consolidated financial statements include the operating results of acquired businesses from the date of acquisition. Separate operating results and pro forma results of operations for the acquisition above have not been presented as the effect of these acquisitions is not material to our financial results.

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill

The following table presents goodwill activity for the years ended December 31, 2018 and 2017 (in millions):



	December 31, 2016		Goodwill Acquired	Adjustments	December 31, 2017		Goodwill Acquired	Adjustments		December 31, 2018
Goodwill	$	4,501	10	262	$	4,773	532	(145	)	$	5,160

The adjustments to goodwill during the years ended December 31, 2018 and 2017 were primarily due to foreign currency translation. There were no impairments to goodwill in 2018 and 2017.

Intangible Assets

The components of identifiable intangible assets are as follows (in millions, except years):



	December 31, 2018								December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (Years)
Intangible assets:
Customer lists and user base	$	519	$	(445	)	$	74	5	$	458	$	(430	)	$	28	5
Marketing-related	584		(578		)	6		5	607		(587		)	20		5
Developed technologies	278		(269		)	9		3	273		(258		)	15		3
All other	160		(157		)	3		4	156		(150		)	6		4
Total	$	1,541	$	(1,449	)	$	92		$	1,494	$	(1,425	)	$	69

Amortization expense for intangible assets was $63 million, $64 million and $56 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Expected future intangible asset amortization as of December 31, 2018 is as follows (in millions):



Fiscal year:
2019	$	49
2020	34
2021	9
Thereafter	—
Total	$	92

Segments

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segments

We have one operating and reportable segment. Our chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The following table sets forth the breakdown of net revenues by type for the periods presented (in millions):



	Year Ended December 31,
	2018		2017		2016
Net revenues by type:
Net transaction revenues:
Marketplace	$	7,416	$	6,809	$	6,425
StubHub	1,068		1,011		938
Total net transaction revenues	8,484		7,820		7,363
Marketing services and other revenues:
Marketplace	1,225		1,192		1,137
Classifieds	1,022		897		791
StubHub, Corporate and other	15		18		7
Total marketing services and other revenues	2,262		2,107		1,935
Total net revenues	$	10,746	$	9,927	$	9,298

The following tables summarize the allocation of net revenues and long-lived tangible assets based on geography (in millions):



	Year Ended December 31,
	2018		2017		2016
Net revenues by geography:
U.S.	$	4,373	$	4,187	$	3,967
Germany	1,591		1,464		1,359
United Kingdom	1,481		1,368		1,331
South Korea	1,195		1,061		957
Rest of world	2,106		1,847		1,684
Total net revenues	$	10,746	$	9,927	$	9,298



	As of December 31,
	2018		2017
Long-lived tangible assets by geography:
U.S.	$	1,661	$	1,603
International	151		160
Total long-lived tangible assets	$	1,812	$	1,763

Net revenues, inclusive of the effects of foreign exchange during each period, are attributed to U.S. and international geographies primarily based upon the country in which the seller, platform that displays advertising, other service provider, or customer, as the case may be, is located. Long-lived assets attributed to the U.S. and international geographies are based upon the country in which the asset is located or owned.

Investments

12 Months Ended

Dec. 31, 2018

Investments [Abstract]

Investments

The following tables summarize the unrealized gains and losses and estimated fair value of our investments classified as available-for-sale as of December 31, 2018 and 2017 (in millions):



	December 31, 2018
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term investments:
Restricted cash	$	17	$	—	$	—		$	17
Corporate debt securities	2,615		—		(9		)	2,606
Government and agency securities	90		—		—			90
	$	2,722	$	—	$	(9	)	$	2,713
Long-term investments:
Corporate debt securities	3,682		1		(48		)	3,635
	$	3,682	$	1	$	(48	)	$	3,635



	December 31, 2017
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term investments:
Restricted cash	$	20	$	—	$	—		$	20
Corporate debt securities	3,726		1		(4		)	3,723
	$	3,746	$	1	$	(4	)	$	3,743
Long-term investments:
Corporate debt securities	5,458		12		(24		)	5,446
	$	5,458	$	12	$	(24	)	$	5,446

Restricted cash is held primarily in interest bearing accounts for letters of credit primarily related to our global sabbatical program and various lease arrangements. Our fixed-income investments consist of predominantly investment grade corporate debt securities and government and agency securities. The corporate debt and government and agency securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies.

The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. The unrealized losses are due primarily to changes in credit spreads and interest rates. We regularly review investment securities for other-than-temporary impairment using both qualitative and quantitative criteria. We presently do not intend to sell any of the securities in an unrealized loss position and expect to realize the full value of all these investments upon maturity or sale.

Investment securities in a continuous loss position for greater than 12 months had an estimated fair value $2.7 billion and unrealized losses of $41 million as of December 31, 2018 and an estimated fair value of $360 million and an immaterial amount of unrealized losses as of December 31, 2017. As of December 31, 2018, these securities had a weighted average remaining maturity of approximately 17 months. Refer to “Note 16 - Accumulated Other Comprehensive Income” for amounts reclassified to earnings from unrealized gains and losses.

The estimated fair values of our short-term and long-term investments classified as available-for-sale by date of contractual maturity as of December 31, 2018 are as follows (in millions):



	December 31, 2018
One year or less (including restricted cash of $17)	$	2,713
One year through two years	1,922
Two years through three years	1,123
Three years through four years	473
Four years through five years	117
Thereafter	—
Total	$	6,348

Equity investments

Our equity investments are reported in long-term investments on our consolidated balance sheet. The following table provides a summary of our equity investments as of December 31, 2018 and December 31, 2017 (in millions):



	December 31, 2018		December 31, 2017
Equity investments without readily determinable fair values	$	137	$	872
Equity investments under the equity method of accounting	6		13
Total equity investments	$	143	$	885

In 2018, we sold our investment in Flipkart and relinquished our existing equity method investment in Giosis as part of the exchange for the acquisition of Giosis’ Japan business. The $313 million gain upon sale of our investment in Flipkart and the $266 million gain upon relinquishment of our equity method investment in Giosis were recorded in

interest and other, net on our consolidated statement of income. Refer to “Note 3 - Business Combinations” for further details on the Giosis acquisition.

In 2017, we made a cost method investment of $50 million. In addition, we received a 5.44% ownership interest in Flipkart in exchange for our eBay India business and a $500 million cash investment, resulting in a cost method investment of $725 million. The gain on disposal of our eBay India business of $167 million was recorded in interest and other, net on our consolidated statement of income. In addition, we recorded a $61 million impairment charge to write-down our cost method investment in Jasper Infotech Private Limited (“Snapdeal”). The investment was measured at fair value due to events and circumstances that we identified as having significant impact on its fair value. The fair value measurement of the impaired investment was measured using significant unobservable inputs. The impairment charge, representing the difference between the net book value and the fair value, was recorded to interest and other, net.

The following table provides a summary of unrealized gains and losses recorded in interest and other, net during the twelve months ended December 31, 2018 related to equity investments without readily determinable fair values still held at December 31, 2018.



	Year Ended December 31, 2018
Net gains/(losses) recognized during the period on equity investments	$	313
Less: Net gains/(losses) recognized during the period on equity investments sold during the period	(313		)
Total unrealized gains/(losses) on equity investments still held at December 31, 2018	$	—

The following table summarizes the total carrying value of equity investments without readily determinable fair values during the twelve months ended December 31, 2018 (in millions):



	Year Ended December 31, 2018
Carrying value, beginning of period	$	872
Additions	23
Sales	(718		)
Downward adjustments for observable price changes and impairment	(20		)
Foreign currency translation and other	(20		)
Carrying value, end of period	$	137

For such equity investments without readily determinable fair values as of December 31, 2018, cumulative downward adjustments for price changes and impairment was $81 million. As of December 31, 2018, there have been no upward adjustments for price changes to our equity investments without readily determinable fair values.

Derivative Instruments

12 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates and interest rates. These hedging contracts reduce, but do not entirely eliminate, the impact of adverse foreign exchange rate and interest rate movements. We do not use any of our derivative instruments for trading purposes.

We use foreign currency exchange contracts to reduce the volatility of cash flows related to forecasted revenues, expenses, assets and liabilities, including intercompany balances denominated in foreign currencies. These contracts are generally one month to one year in duration, but with maturities up to 18 months. The objective of the foreign exchange contracts is to better ensure that ultimately the U.S. dollar-equivalent cash flows are not adversely affected by changes in the applicable U.S. dollar/foreign currency exchange rate. We evaluate the effectiveness of our foreign

exchange contracts designated as cash flow or net investment hedges on a quarterly basis.

We use interest rate swaps to manage interest rate risk on our fixed rate notes issued in July 2014 and maturing in 2019, 2021 and 2024. These interest rate swaps had the economic effect of modifying the fixed interest obligations associated with $2.4 billion of these notes so that the interest payable on these senior notes effectively became variable based on LIBOR plus a spread. The duration of these interest rate contracts matches the duration of the fixed rate notes due 2019, 2021 and 2024.

Cash Flow Hedges

For derivative instruments that are designated as cash flow hedges, the derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income (“AOCI”) and subsequently reclassified into earnings in the same period the forecasted transaction affects earnings. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Unrealized gains and losses in AOCI associated with such derivative instruments are immediately reclassified into earnings. As of December 31, 2018, we have estimated that approximately $64 million of net derivative gain related to our cash flow hedges included in accumulated other comprehensive income will be reclassified into earnings within the next 12 months. We classify cash flows related to our cash flow hedges as operating activities in our consolidated statement of cash flows.

Net Investment Hedges

For derivative instruments that are designated as net investment hedges, the derivative’s gain or loss is initially reported in the translation adjustments component of AOCI and is reclassified to net earnings in the period in which the hedged subsidiary is either sold or substantially liquidated.

Fair Value Hedges

We have designated the interest rate swaps used to manage interest rate risk on our fixed rate notes issued in July 2014 and maturing in 2019, 2021 and 2024 as qualifying hedging instruments and are accounting for them as fair value hedges. These transactions are designated as fair value hedges for financial accounting purposes because they protect us against changes in the fair value of certain of our fixed rate borrowings due to benchmark interest rate movements. Changes in the fair values of these interest rate swap agreements are recognized in other assets or other liabilities with a corresponding increase or decrease in long-term debt. Each quarter we pay interest based on LIBOR plus a spread to the counterparty and on a semi-annual basis receive interest from the counterparty per the fixed rate of these senior notes. The net amount is recognized as interest expense in interest and other, net.

Non-Designated Hedges

Our derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge monetary assets or liabilities, including intercompany balances denominated in non-functional currencies. The gains and losses on our derivatives not designated as hedging instruments are recorded in interest and other, net, which are offset by the foreign currency gains and losses on the related assets and liabilities that are also recorded in interest and other, net. We classify cash flows related to our non-designated hedging instruments as operating activities in our consolidated statement of cash flows.

Warrant

We entered into a warrant agreement in conjunction with a commercial agreement with a service provider that, subject to meeting certain conditions, entitles us to acquire a fixed number of shares up to 5% of the service providers fully diluted issued and outstanding share capital at a specific date. The warrant has a term of seven years and will vest in a series of four tranches, at a specified price per share upon meeting significant processing volume milestone targets on a calendar year basis. If and when the relevant milestone is reached, the warrant becomes exercisable with respect to the corresponding tranche of warrant shares up until the warrant expiration date of January 31, 2025. The maximum number of tranches that can vest in one calendar year is two.

The warrant is accounted for as a derivative under ASC Topic 815, Derivatives and Hedging. We report the warrant at fair value within other assets in our consolidated balance sheets and changes in the fair value of the warrant are

recognized in interest and other, net in our consolidated statement of income. The day-one value attributable to the other side of the warrant, which was recorded as a deferred credit, is reported within other liabilities in our consolidated balance sheets and will be amortized over the life of the commercial arrangement.

Fair Value of Derivative Contracts

The fair values of our outstanding derivative instruments as of December 31, 2018 and 2017 were as follows (in millions):



	Balance Sheet Location	December 31, 2018		December 31, 2017
Derivative Assets:
Foreign exchange contracts designated as cash flow hedges	Other Current Assets	$	72	$	16
Foreign exchange contracts not designated as hedging instruments	Other Current Assets	38		10
Warrant	Other Assets	148		—
Foreign exchange contracts designated as cash flow hedges	Other Assets	4		—
Interest rate contracts designated as fair value hedges	Other Assets	—		2
Total derivative assets		$	262	$	28

Derivative Liabilities:
Foreign exchange contracts designated as cash flow hedges	Other Current Liabilities	$	—	$	18
Foreign exchange contracts designated as net investment hedges	Other Current Liabilities	1		—
Interest rate contracts designated as fair value hedges	Other Current Liabilities	7		—
Foreign exchange contracts not designated as hedging instruments	Other Current Liabilities	30		11
Interest rate contracts designated as fair value hedges	Other Liabilities	10		—
Total derivative liabilities		$	48	$	29

Total fair value of derivative instruments		$	214	$	(1	)

Under the master netting agreements with the respective counterparties to our derivative contracts, subject to applicable requirements, we are allowed to net settle transactions of the same type with a single net amount payable by one party to the other. However, we have elected to present the derivative assets and derivative liabilities on a gross basis on our consolidated balance sheet. As of December 31, 2018, the potential effect of rights of set-off associated with the foreign exchange contracts would be an offset to both assets and liabilities by $30 million, resulting in net derivative assets of $84 million and net derivative liabilities of $1 million.

Effect of Derivative Contracts on Accumulated Other Comprehensive Income

The following tables present the activity of derivative instruments designated as cash flow hedges as of December 31, 2018 and 2017, and the impact of these derivative contracts on AOCI for the years ended December 31, 2018 and 2017 (in millions):



	December 31, 2017			Amount of Gain (Loss) Recognized in Other Comprehensive Income	Amount of Gain (Loss) Reclassified From AOCI to Earnings		December 31, 2018
Foreign exchange contracts designated as cash flow hedges	$	(57	)	117	(8	)	$	68



	December 31, 2016		Amount of Gain (Loss) Recognized in Other Comprehensive Income		Amount of Gain (Loss) Reclassified From AOCI to Earnings	December 31, 2017
Foreign exchange contracts designated as cash flow hedges	$	54	(104	)	7	$	(57	)

Effect of Derivative Contracts on Consolidated Statement of Income

The following table provides a summary of the total gain (loss) recognized in the consolidated statement of income from our foreign exchange derivative contracts by location (in millions):



	Year Ended December 31,
	2018			2017			2016
Foreign exchange contracts designated as cash flow hedges recognized in net revenues	$	(8	)	$	(28	)	$	—
Foreign exchange contracts designated as cash flow hedges recognized in cost of net revenues and operating expenses	—			11			7
Foreign exchange contracts designated as cash flow hedges recognized in interest and other, net	—			24			101
Foreign exchange contracts not designated as hedging instruments recognized in interest and other, net	9			(16		)	11
Total gain (loss) recognized from foreign exchange derivative contracts in the consolidated statement of income	$	1		$	(9	)	$	119

The following table provides a summary of the total gain (loss) recognized in the consolidated statement of income from our interest rate derivative contracts by location (in millions):



	Year Ended December 31,
	2018			2017			2016
Gain (loss) from interest rate contracts designated as fair value hedges recognized in interest and other, net	$	(19	)	$	(21	)	$	(18	)
Gain (loss) from hedged items attributable to hedged risk recognized in interest and other, net	19			21			18
Total gain (loss) recognized from interest rate derivative contracts in the consolidated statement of income	$	—		$	—		$	—

The following table provides a summary of the total gain recognized in the consolidated statement of income due to changes in the fair value of the warrant (in millions):



	Year Ended December 31,
	2018		2017		2016
Gain attributable to changes in the fair value of warrant recognized in interest and other, net	$	104	$	—	$	—

Notional Amounts of Derivative Contracts

Derivative transactions are measured in terms of the notional amount, but this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged, but is used only as the basis on which the value of foreign exchange payments under these contracts are determined. The following table provides the notional amounts of our outstanding derivatives as of December 31, 2018 and 2017 (in millions):



	December 31,
	2018		2017
Foreign exchange contracts designated as cash flow hedges	$	1,510	$	1,990
Foreign exchange contracts designated as net investment hedges	804		—
Foreign exchange contracts not designated as hedging instruments	3,517		2,349
Interest rate contracts designated as fair value hedges	2,400		2,400
Total	$	8,231	$	6,739

Credit Risk

Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement. We seek to mitigate such risk by limiting our counterparties to, and by spreading the risk across, major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. To further limit credit risk, we also enter into collateral security arrangements related to certain interest rate derivative instruments whereby collateral is posted between counterparties if the fair value of the derivative instrument exceeds certain thresholds. Additional collateral would be required in the event of a significant credit downgrade by either party. We are not required to pledge, nor are we entitled to receive, collateral related to our foreign exchange derivative transactions. As of December 31, 2018, we had neither pledged nor received collateral related to our interest rate derivative transactions.

Fair Value Measurement of Assets and Liabilities

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurement of Assets and Liabilities

The following tables present our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017 (in millions):



	December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents	$	2,202	$	2,052	$	150	$	—
Short-term investments:
Restricted cash	17		17		—		—
Corporate debt securities	2,606		—		2,606		—
Government and agency securities	90		—		90		—
Total short-term investments	2,713		17		2,696		—
Derivatives	262		—		114		148
Long-term investments:
Corporate debt securities	3,635		—		3,635		—
Total long-term investments	3,635		—		3,635		—
Total financial assets	$	8,812	$	2,069	$	6,595	$	148

Liabilities:
Derivatives	$	48	$	—	$	48	$	—



	December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents	$	2,120	$	2,120	$	—	$	—
Short-term investments:
Restricted cash	20		20		—		—
Corporate debt securities	3,723		—		3,723		—
Total short-term investments	3,743		20		3,723		—
Derivatives	28		—		28		—
Long-term investments:
Corporate debt securities	5,446		—		5,446		—
Total long-term investments	5,446		—		5,446		—
Total financial assets	$	11,337	$	2,140	$	9,197	$	—

Liabilities:
Derivatives	$	29	$	—	$	29	$	—

Our financial assets and liabilities are valued using market prices on both active markets (Level 1), less active markets (Level 2) and little or no market activity (Level 3). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs. Level 3 instrument valuations typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. We did not have any transfers of financial instruments between valuation levels during 2018 or 2017.

The majority of our derivative instruments are valued using pricing models that take into account the contract terms as well as multiple inputs where applicable, such as equity prices, interest rate yield curves, option volatility and currency rates. Our warrant, which is accounted for as a derivative instrument, is valued using a Black-Scholes model. Key assumptions used in the valuation include risk-free interest rates; the service provider’s common stock price, equity volatility and common stock outstanding; exercise price; and details specific to the warrant. The value is also probability adjusted for management assumptions with respect to meeting the processing volume milestone targets. Refer to “Note 7 - Derivative Instruments” for further details on our derivative instruments.

Other financial instruments, including accounts receivable and accounts payable, are carried at cost, which approximates their fair value because of the short-term nature of these instruments.

The following table presents a reconciliation of the opening to closing balance of assets measured using significant unobservable inputs (Level 3) as of December 31, 2018 (in millions):



	December 31, 2018
Opening balance as of January 1, 2018	$	—
Recognition of warrant	44
Change in fair value	104
Closing balance as of December 31, 2018	$	148

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Balance Sheet Components

12 Months Ended

Dec. 31, 2018

Balance Sheet Components [Abstract]

Balance Sheet Components

Other Current Assets



	December 31,
	2018		2017
	(In millions)
Customer accounts and funds receivable	$	670	$	662
Other	829		523
Other current assets	$	1,499	$	1,185

Property and Equipment, Net



	December 31,
	2018			2017
	(In millions)
Computer equipment and software	$	4,933		$	4,609
Land and buildings, including building improvements	713			620
Leasehold improvements	399			370
Furniture and fixtures	169			169
Construction in progress and other	130			239
Property and equipment, gross	6,344			6,007
Accumulated depreciation	(4,747		)	(4,410		)
Property and equipment, net	$	1,597		$	1,597

Total depreciation expense on our property and equipment for the years ended December 31, 2018, 2017 and 2016 totaled $626 million, $612 million and $605 million, respectively.

Accrued Expenses and Other Current Liabilities



	December 31,
	2018		2017
	(In millions)
Customer accounts and funds payable	$	681	$	629
Compensation and related benefits	410		469
Advertising accruals	264		236
Other current tax liabilities	229		—
Other	751		800
Accrued expenses and other current liabilities	$	2,335	$	2,134

Debt

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Debt

The following table summarizes the carrying value of our outstanding debt (in millions, except percentages):



	Coupon	As of			Effective		As of			Effective
	Rate	December 31, 2018			Interest Rate		December 31, 2017			Interest Rate
Long-Term Debt
Floating Rate Notes:
Senior notes due 2019	LIBOR plus 0.48%	$	400		3.123	%	$	400		1.955	%
Senior notes due 2023	LIBOR plus 0.87%	400			3.499	%	400			2.349	%

Fixed Rate Notes:
Senior notes due 2018	2.500%	—			—	%	750			2.775	%
Senior notes due 2019	2.200%	1,150			2.346	%	1,150			2.346	%
Senior notes due 2020	3.250%	500			3.389	%	500			3.389	%
Senior notes due 2020	2.150%	500			2.344	%	500			2.344	%
Senior notes due 2021	2.875%	750			2.993	%	750			2.993	%
Senior notes due 2022	3.800%	750			3.989	%	750			3.989	%
Senior notes due 2022	2.600%	1,000			2.678	%	1,000			2.678	%
Senior notes due 2023	2.750%	750			2.866	%	750			2.866	%
Senior notes due 2024	3.450%	750			3.531	%	750			3.531	%
Senior notes due 2027	3.600%	850			3.689	%	850			3.689	%
Senior notes due 2042	4.000%	750			4.114	%	750			4.114	%
Senior notes due 2056	6.000%	750			6.547	%	750			6.547	%
Total senior notes		9,300					10,050
Hedge accounting fair value adjustments		(10		)			2
Unamortized discount and debt issuance costs		(55		)			(68		)
Less: Current portion of long-term debt		(1,550		)			(750		)
Total long-term debt		7,685					9,234

Short-Term Debt
Current portion of long-term debt		1,550					750
Hedge accounting fair value adjustments		(7		)			—
Unamortized discount and debt issuance costs		(1		)			—
Other indebtedness		4					31
Total short-term debt		1,546					781
Total Debt		$	9,231				$	10,015

Senior Notes

In 2018, $750 million of 2.500% fixed rate notes due 2018 matured and were repaid. In 2017, we issued senior unsecured notes, or senior notes, in an aggregate principal amount of $2.5 billion. The issuance consisted of $400 million of floating rate notes due 2023, $500 million of 2.150% fixed rate notes due 2020, $750 million of 2.750% fixed rate notes due 2023 and $850 million of 3.600% fixed rate notes due 2027. In addition, $1.0 billion of 1.350% fixed rate notes due 2017 and $450 million of floating rate notes due 2017 matured and were repaid in 2017.

None of the floating rate notes are redeemable prior to maturity. On and after March 1, 2021, we may redeem some or all of the 6.000% fixed rate notes due 2056 at any time and from time to time prior to their maturity at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. We may redeem some or all of the other fixed rate notes of each series at any time and from time to time prior to their maturity, generally at a make-whole redemption price, plus accrued and unpaid interest.

If a change of control triggering event occurs with respect to the 2.150% fixed rate notes due 2020, the 3.800% fixed rate notes due 2022, the floating rate notes due 2023, the 2.750% fixed rate notes due 2023, the 3.600% fixed rate notes due 2027 or the 6.000% fixed rate notes due 2056, we must, subject to certain exceptions, offer to repurchase all of the notes of the applicable series at a price equal to 101% of the principal amount, plus accrued and unpaid interest.

The indenture pursuant to which the senior notes were issued includes customary covenants that, among other things and subject to exceptions, limit our ability to incur, assume or guarantee debt secured by liens on specified assets or enter into sale and lease-back transactions with respect to specified properties, and also includes customary events of default.

To help achieve our interest rate risk management objectives, in connection with the previous issuance of certain senior notes, we entered into interest rate swap agreements that effectively converted $2.4 billion of our fixed rate notes to floating rate debt based on LIBOR plus a spread. These swaps were designated as fair value hedges against changes in the fair value of certain fixed rate senior notes resulting from changes in interest rates. The gains and losses related to changes in the fair value of interest rate swaps substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to changes in market interest rates.

The effective interest rates for our senior notes include the interest payable, the amortization of debt issuance costs and the amortization of any original issue discount on these senior notes. Interest on these senior notes is payable either quarterly or semiannually. Interest expense associated with these senior notes, including amortization of debt issuance costs, during the years ended December 31, 2018, 2017 and 2016 was approximately $318 million, $307 million and $254 million, respectively. As of December 31, 2018 and 2017, the estimated fair value of these senior notes, using Level 2 inputs, was approximately $9.0 billion and $10.1 billion, respectively.

Commercial Paper

We have a commercial paper program pursuant to which we may issue commercial paper notes in an aggregate principal amount at maturity of up to $1.5 billion outstanding at any time with maturities of up to 397 days from the date of issue. As of December 31, 2018, there were no commercial paper notes outstanding.

Credit Agreement

In November 2015, we entered into a credit agreement that provides for an unsecured $2 billion five-year revolving credit facility. We may also, subject to the agreement of the applicable lenders, increase the commitments under the revolving credit facility by up to an aggregate amount of $1 billion. Funds borrowed under the credit agreement may be used for working capital, capital expenditures, dividends, acquisitions and other general corporate purposes.

As of December 31, 2018, no borrowings were outstanding under our $2 billion credit agreement. However, as described above, we have an up to $1.5 billion commercial paper program and therefore maintain $1.5 billion of available borrowing capacity under our credit agreement in order to repay commercial paper borrowings in the event we are unable to repay those borrowings from other sources when they become due. As a result, $500 million of borrowing capacity was available as of December 31, 2018 for other purposes permitted by the credit agreement.

Loans under the credit agreement bear interest at either (i) LIBOR plus a margin (based on our public debt credit ratings) ranging from 0.875 percent to 1.5 percent or (ii) a formula based on the agent bank’s prime rate, the federal funds effective rate plus 0.5 percent or LIBOR plus 1.0 percent, plus a margin (based on our public debt credit ratings) ranging from zero percent to 0.5 percent. The credit agreement will terminate and all amounts owing thereunder will be due and payable on November 9, 2020, unless (a) the commitments are terminated earlier, either at our request or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-related events of default), or (b) the maturity date is extended upon our request, subject to the agreement of the lenders. The credit agreement includes customary representations, warranties, affirmative and negative covenants, including financial

covenants, events of default and indemnification provisions in favor of the banks. The negative covenants include restrictions regarding the incurrence of liens and subsidiary indebtedness, in each case, subject to certain exceptions. The financial covenants require us to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio and a maximum consolidated leverage ratio. The events of default include the occurrence of a change of control (as defined in the credit agreement) with respect to us.

We were in compliance with all covenants in our outstanding debt instruments for the period ended December 31, 2018.

Future Maturities

Expected future principal maturities as of December 31, 2018 are as follows (in millions):



Fiscal Years:
2019	$	1,550
2020	1,000
2021	750
2022	1,750
2023	1,150
Thereafter	3,100
Total future maturities	$	9,300

Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments

Lease Arrangements

We have lease obligations under certain non-cancelable operating leases. Future minimum rental payments under our non-cancelable operating leases as of December 31, 2018 are as follows (in millions):



	Leases
2019	$	136
2020	104
2021	91
2022	76
2023	51
Thereafter	119
Total minimum lease payments	$	577

Rent expense for the years ended December 31, 2018, 2017 and 2016 totaled $118 million, $105 million and $84 million, respectively.

Off-Balance Sheet Arrangements

As of December 31, 2018, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

We have a cash pooling arrangement with a financial institution for cash management purposes. This arrangement allows for cash withdrawals from the financial institution based upon our aggregate operating cash balances held within the same financial institution (“Aggregate Cash Deposits”). This arrangement also allows us to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit. The net balance of the withdrawals and the Aggregate Cash Deposits are used by the financial institution as a basis for calculating our net interest expense or income under the arrangement. As of December 31, 2018, we had a total of $2.7 billion in aggregate cash deposits, partially offset by $2.4 billion in cash withdrawals, held within the financial institution under the cash pooling arrangement.

Litigation and Other Legal Matters

Overview

We are involved in legal and regulatory proceedings on an ongoing basis. Many of these proceedings are in early stages and may seek an indeterminate amount of damages. If we believe that a loss arising from such matters is probable and can be reasonably estimated, we accrue the estimated liability in our financial statements. If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range. For those proceedings in which an unfavorable outcome is reasonably possible but not probable, we have disclosed an estimate of the reasonably possible loss or range of losses or we have concluded that an estimate of the reasonably possible loss or range of losses arising directly from the proceeding (i.e., monetary damages or amounts paid in judgment or settlement) is not material. If we cannot estimate the probable or reasonably possible loss or range of losses arising from a proceeding, we have disclosed that fact. In assessing the materiality of a proceeding, we evaluate, among other factors, the amount of monetary damages claimed, as well as the potential impact of non-monetary remedies sought by plaintiffs (e.g., injunctive relief) that may require us to change our business practices in a manner that could have a material adverse impact on our business. With respect to the matters disclosed in this Note 11, we are unable to estimate the possible loss or range of losses that could potentially result from the application of such non-monetary remedies.

Amounts accrued for legal and regulatory proceedings for which we believe a loss is probable were not material for the twelve months ended December 31, 2018. Except as otherwise noted for the proceedings described in this Note 11, we have concluded, based on currently available information, that reasonably possible losses arising directly from the proceedings (i.e., monetary damages or amounts paid in judgment or settlement) in excess of our recorded accruals are also not material. However, legal and regulatory proceedings are inherently unpredictable and subject to significant uncertainties. If one or more matters were resolved against us in a reporting period for amounts in excess of management’s expectations, the impact on our operating results or financial condition for that reporting period could be material. Legal fees are expensed as incurred.

General Matters

Third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights. We are subject to patent disputes, and expect that we could be subject to additional patent infringement claims involving various aspects of our business as our products and services continue to expand in scope and complexity. Such claims may be brought directly or indirectly against our companies and/or against our customers (who may be entitled to contractual indemnification under their contracts with us), and we are subject to increased exposure to such claims as a result of our acquisitions and divestitures and in cases where we are entering new lines of business. We have in the past been forced to litigate such claims. We may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act, the Lanham Act and the Communications Decency Act are interpreted by the courts, and as we expand the scope of our business (both in terms of the range of products and services that we offer and our geographical operations) and become subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries like ourselves are either unclear or less favorable. We believe that additional lawsuits alleging that we have violated patent, copyright or trademark laws will be filed against us. Intellectual property claims, whether meritorious or not, are time consuming and costly to defend and resolve, could require expensive changes in our methods of doing business or could require us to enter into costly royalty or licensing agreements on unfavorable terms.

From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary course of business, including suits by our users (individually or as class actions) alleging, among other things, improper disclosure

of our prices, rules or policies, that our practices, prices, rules, policies or customer/user agreements violate applicable law or that we have acted unfairly and/or not acted in conformity with such practices, prices, rules, policies or agreements. Further, the number and significance of these disputes and inquiries are increasing as the political and regulatory landscape changes and, as we have grown larger, our businesses have expanded in scope (both in terms of the range of products and services that we offer and our geographical operations) and our products and services have increased in complexity. Any claims or regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, damage awards (including statutory damages for certain causes of action in certain jurisdictions), injunctive relief or increased costs of doing business through adverse judgment or settlement, require us to change our business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources or otherwise harm our business.

Indemnification Provisions

We entered into a separation and distribution agreement and various other agreements with PayPal to govern the separation and relationship of the two companies. These agreements provide for specific indemnity and liability obligations and could lead to disputes between us and PayPal, which may be significant. In addition, the indemnity rights we have against PayPal under the agreements may not be sufficient to protect us and our indemnity obligations to PayPal may be significant.

In addition, we have entered into indemnification agreements with each of our directors, executive officers and certain other officers. These agreements require us to indemnify such individuals, to the fullest extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their affiliation with us.

In the ordinary course of business, we have included limited indemnification provisions in certain of our agreements with parties with which we have commercial relations, including our standard marketing, promotions and application-programming-interface license agreements. Under these contracts, we generally indemnify, hold harmless and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with claims by a third party with respect to our domain names, trademarks, logos and other branding elements to the extent that such marks are applicable to our performance under the subject agreement. In certain cases, we have agreed to provide indemnification for intellectual property infringement. It is not possible to determine the maximum potential loss under these indemnification provisions due to our limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision.

To date, losses recorded in our consolidated statement of income in connection with our indemnification provisions have not been significant, either individually or collectively.

Stockholders' Equity

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Preferred Stock

We are authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series; to establish the number of shares included within each series; to fix the rights, preferences and privileges of the shares of each wholly unissued series and any related qualifications, limitations or restrictions; and to increase or decrease the number of shares of any series (but not below the number of shares of a series then outstanding) without any further vote or action by our stockholders. As of December 31, 2018 and 2017, there were 10 million shares of $0.001 par value preferred stock authorized for issuance, and no shares issued or outstanding.

Common Stock

Our Amended and Restated Certificate of Incorporation authorizes us to issue 3.6 billion shares of common stock.

Stock Repurchase Programs

Our stock repurchase programs are intended to programmatically offset the impact of dilution from our equity compensation programs and, subject to market conditions and other factors, to make opportunistic and programmatic repurchases of our common stock to reduce our outstanding share count. Any share repurchases under our stock repurchase programs may be made through open market transactions, block trades, privately negotiated transactions (including accelerated share repurchase transactions) or other means at times and in such amounts as management deems appropriate and will be funded from our working capital or other financing alternatives. Our stock repurchase programs may be limited or terminated at any time without prior notice. The timing and actual number of shares repurchased will depend on a variety of factors, including corporate and regulatory requirements, price and other market conditions and management’s determination as to the appropriate use of our cash.

In July 2017, our Board of Directors (“Board”) authorized a $3.0 billion stock repurchase program, and in January 2018, our Board authorized an additional $6.0 billion stock repurchase program. These stock repurchase programs have no expiration from the date of authorization. The stock repurchase activity under our stock repurchase programs during 2018 was as follows (in millions, except per share amounts):



	Shares Repurchased ⁽¹⁾	Average Price per Share ⁽²⁾		Value of Shares Repurchased ⁽²⁾		Remaining Amount Authorized
Balance as of January 1, 2018						$	1,651
Authorization of additional plan in January 2018						6,000
Repurchase of shares of common stock	131	$	34.31	$	4,500	(4,500		)
Balance as of December 31, 2018						$	3,151


(1)	These repurchased shares of common stock were recorded as treasury stock and were accounted for under the cost method. None of the repurchased shares of common stock have been retired.


(2)	Excludes broker commissions.

In January 2019, our Board authorized an additional $4.0 billion stock repurchase program, with no expiration from the date of authorization. In addition, our Board of Directors initiated a quarterly cash dividend of $0.14 per share of common stock to be paid on or about March 20, 2019 to shareholders of record as of March 1, 2019.

Employee Benefit Plans

12 Months Ended

Dec. 31, 2018

Share-based Compensation [Abstract]

Employee Benefit Plans

Equity Incentive Plans

We have equity incentive plans under which we grant equity awards, including stock options, restricted stock units (“RSUs”), performance-based restricted stock units (“PBRSUs”), stock payment awards and performance share units, to our directors, officers and employees. As of December 31, 2018, 755 million shares were authorized under our equity incentive plans and 66 million shares were available for future grant.

Stock options granted under these plans generally vest 12.5% six months from the date of grant (or 25% one year from the date of grant for grants to new employees) with the remainder vesting at a rate of 2.08% per month thereafter, and generally expire seven to ten years from the date of grant. RSU awards granted to eligible employees under our equity incentive plans generally vest in annual or quarterly installments over a period of three to five years, are subject to the employees’ continuing service to us and do not have an expiration date.

In 2018, 2017 and 2016, certain executives were eligible to receive PBRSU. PBRSU awards are subject to performance and time-based vesting requirements. The target number of shares subject to the PBRSU award are adjusted based on our business performance measured against the performance goals approved by the Compensation Committee at the beginning of the performance period. Generally, if the performance criteria is satisfied, one-half of the award vests in March following the end of the performance period and the other half of the award vests in March of the following year.

Deferred Stock Units

Prior to December 31, 2016, we granted deferred stock units to each non-employee director (other than Mr. Omidyar) at the time of our annual meeting of stockholders and to new non-employee directors upon their election to the Board. Each deferred stock unit award granted to a new non-employee director upon election to the Board vests 25% one year from the date of grant, and at a rate of 2.08% per month thereafter. In addition, directors were permitted to elect to receive, in lieu of annual retainer and committee chair fees and at the time these fees would otherwise be payable, fully vested deferred stock units with an initial value equal to the amount based on the fair market value of common stock at the date of grant. Following termination of a non-employee director’s service on the Board, deferred stock units granted prior to August 1, 2013 are payable in stock or cash (at our election), while deferred stock units granted on or after August 1, 2013 are payable solely in stock. As of December 31, 2018, there were approximately 207,179 deferred stock units outstanding, which are included in our restricted stock unit activity below. As of December 31, 2016, we no longer grant deferred stock units.

Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan (“ESPP”) for all eligible employees. Under the plan, shares of our common stock may be purchased over an offering period with a maximum duration of two years at 85% of the lower of the fair market value on the first day of the applicable offering period or on the last day of the six-month purchase period. Employees may purchase shares having a value not exceeding 10% of their eligible compensation during an offering period. During 2018, 2017, and 2016, employees purchased approximately 4 million, 4 million and 4 million shares under this plan at average prices of $23.82, $22.32 and $18.97 per share, respectively. As of December 31, 2018, approximately 12 million shares of common stock were reserved for future issuance.

Stock Option Activity

No stock options were granted in 2018 and 2017, and an immaterial amount of stock options were granted during 2016. The weighted average grant-date fair value of options granted during 2016 was $5.40.

During 2018, 2017 and 2016, the aggregate intrinsic value of options exercised under our equity incentive plans was $18 million, $26 million and $16 million, respectively, determined as of the date of option exercise. As of December 31, 2018, options to purchase 2 million shares of our common stock were outstanding and in-the-money.

Restricted Stock Unit Activity

The following table presents RSU activity (including PBRSUs that have been earned) under our equity incentive plans as of and for the year ended December 31, 2018 (in millions except per share amounts):



	Units		Weighted Average Grant-Date Fair Value (per share)
Outstanding as of January 1, 2018	42		$	28.54
Awarded and assumed	19		$	39.05
Vested	(18	)	$	28.57
Forfeited	(9	)	$	32.47
Outstanding as of December 31, 2018	34		$	33.59
Expected to vest as of December 31, 2018	28

During 2018, 2017 and 2016, the aggregate intrinsic value of RSUs vested under our equity incentive plans was $684 million, $635 million and $418 million, respectively.

Stock-Based Compensation Expense

The following table presents stock-based compensation expense for the years ended December 31, 2018, 2017 and 2016 (in millions):



	Year Ended December 31,
	2018		2017		2016
Cost of net revenues	$	59	$	53	$	34
Sales and marketing	111		94		95
Product development	197		178		158
General and administrative	171		158		129
Total stock-based compensation expense	$	538	$	483	$	416
Capitalized in product development	$	14	$	14	$	13

As of December 31, 2018, there was approximately $820 million of unearned stock-based compensation that will be expensed from 2019 through 2022. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel all or a portion of the remaining unearned stock-based compensation expense. Future unearned stock-based compensation will increase to the extent we grant additional equity awards, change the mix of grants between stock options and restricted stock units or assume unvested equity awards in connection with acquisitions.

Employee Savings Plans

We have a defined contribution plan, which is qualified under Section 401(k) of the Internal Revenue Code. Participating employees may contribute up to 50% of their eligible compensation, but not more than statutory limits. In 2018, 2017 and 2016, we contributed one dollar for each dollar a participant contributed, with a maximum contribution of 4% of each employee’s eligible compensation, subject to a maximum employer contribution of $11,000, $10,800 and $10,600 per employee for each period, respectively. Our non-U.S. employees are covered by various other savings plans. Total expense for these plans was $60 million, $57 million and $49 million in 2018, 2017 and 2016, respectively.

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

The components of pretax income for the years ended December 31, 2018, 2017 and 2016 are as follows (in millions):



	Year Ended December 31,
	2018		2017		2016
United States	$	299	$	417	$	1,529
International	2,419		1,858		2,122
	$	2,718	$	2,275	$	3,651

The provision (benefit) for income taxes is comprised of the following (in millions):



	Year Ended December 31,
	2018			2017			2016
Current:
Federal	$	73		$	1,426		$	689
State and local	25			(17		)	55
Foreign	245			151			178
	$	343		$	1,560		$	922
Deferred:
Federal	$	(488	)	$	1,788		$	77
State and local	(10		)	4			—
Foreign	345			(64		)	(4,633		)
	(153		)	1,728			(4,556		)
	$	190		$	3,288		$	(3,634	)

The following is a reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the federal statutory rate of 21% for 2018 and 35% for 2017 and 2016 to income before income taxes (in millions):



	Year Ended December 31,
	2018			2017			2016
Provision at statutory rate	$	571		$	797		$	1,278
Foreign income taxed at different rates	(16		)	(217		)	(451		)
Other taxes on foreign operation	26			330			105
Stock-based compensation	(3		)	(33		)	24
State taxes, net of federal benefit	13			(13		)	55
Research and other tax credits	(30		)	(35		)	(16		)
Tax basis step-up resulting from realignment	(9		)	(695		)	(4,621		)
Impact of tax rate change	108			—			—
U.S. tax reform	(463		)	3,142			—
Other	(7		)	12			(8		)
	$	190		$	3,288		$	(3,634	)

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to be reversed. Significant deferred tax assets and liabilities consist of the following (in millions):



	As of December 31,
	2018			2017
Deferred tax assets:
Net operating loss, capital loss and credits	$	136		$	86
Accruals and allowances	168			129
Stock-based compensation	22			40
Amortizable tax basis in intangibles	4,757			5,164
Net deferred tax assets	5,083			5,419
Valuation allowance	(65		)	(19		)
	$	5,018		$	5,400
Deferred tax liabilities:
Unremitted foreign earnings	$	(2,930	)	$	(3,514	)
Acquisition-related intangibles	(46		)	(24		)
Depreciation and amortization	(132		)	(89		)
Net unrealized gain	(27		)	(2		)
Available-for-sale securities	(15		)	(2		)
	(3,150		)	(3,631		)
	$	1,868		$	1,769

As of December 31, 2018, our federal, state and foreign net operating loss carryforwards for income tax purposes were approximately $12 million, $55 million and $247 million, respectively. The federal and state net operating loss carryforwards are subject to various limitations under Section 382 of the Internal Revenue Code and applicable state tax laws. If not utilized, the federal and state net operating loss carryforwards will begin to expire in 2021 and 2020, respectively. The carryforward periods on our foreign net operating loss carryforwards are as follows: $64 million do not expire, $132 million are subject to valuation allowance and begin to expire in 2019, and $51 million are not subject to valuation allowance but will begin to expire in 2024. As of December 31, 2018, state tax credit carryforwards for income tax purposes were approximately $129 million. Most of the state tax credits carry forward indefinitely.

As of December 31, 2018 and 2017, we maintained a valuation allowance with respect to certain of our deferred tax assets relating primarily to operating losses in certain non-U.S. jurisdictions and certain state tax credits that we believe are not likely to be realized.

During the fourth quarter of 2016, we began the process of realigning our legal structure, subsequent to the distribution of PayPal Holdings, Inc., to better reflect how we manage and operate our platforms. We consider many factors in effecting this realignment, including foreign exchange exposures, long-term cash flows and cash needs of our platforms, capital allocation considerations and the associated tax effects. As a result, we achieved a substantial step-up in the tax basis of the intangible assets in our foreign eBay platforms in 2016. The step-up in tax basis of our foreign eBay platforms resulted from our election to terminate an existing tax ruling and finalize a new agreement with the foreign tax authority. In the fourth quarter of 2016, we recognized a tax benefit of $4.6 billion, which represented the income tax effect of this step-up in tax basis. During the first half of 2017, we recognized a noncash income tax charge of $376 million caused by the foreign exchange remeasurement of the associated deferred tax asset. In the first quarter of 2017, we achieved a step-up in the tax basis of the intangible assets in our foreign Classifieds platforms as a result of voluntary domiciling our Classifieds intangible assets into a new jurisdiction and recognized a tax benefit of $695 million.

As a result of the realignment of our legal structure in 2016 and 2017, we no longer benefit from tax rulings previously concluded in several different jurisdictions. Without the benefit of the rulings, the noncash tax impacts of the realignment in our foreign eBay and Classifieds platforms have increased our income tax rate in certain foreign jurisdictions, most significantly Switzerland. The higher rate results from eBay being subject to a higher enacted tax rate for the foreseeable future.

While our tax rate is higher, the realignment allows us to achieve certain foreign cash tax benefits due to the step-up in tax basis achieved in certain foreign jurisdictions. We expect these cash tax benefits to remain consistent, subject to the performance of our foreign platforms, for a period in excess of 10 years. The realignment was substantially completed by the end of 2018 and primarily impact our international entities. However, U.S. tax reform and the new U.S. minimum tax on foreign earnings has reduced our expected consolidated cash tax benefits.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted. U.S. tax reform, among other things, reduces the U.S. federal income tax rate from 35% to 21% in 2018, instituted a dividends received deduction for foreign earnings with a related tax for the deemed repatriation of unremitted foreign earnings in 2017 and created a new U.S. minimum tax on earnings of foreign subsidiaries. We recognized a provisional income tax charge of $3.1 billion in the fourth quarter of 2017, which was included as a component of the income tax provision on our consolidated statement of income. We completed our analysis of the impacts of U.S. tax reform in the fourth quarter of 2018 and recognized a $463 million reduction to the provisional tax amounts recorded in the fourth quarter of 2017, which is included as a component of income tax expense from continuing operations.

Included in the provisional amount was $1.4 billion for the income tax on the deemed repatriation of unremitted foreign earnings. We completed the computation of this amount as part of the 2017 income tax return filing and reduced the provisional amount by $18 million. Additionally, we utilized $213 million of foreign tax credits to reduce the net liability. We elected to pay the liability for the deemed repatriation of foreign earnings in installments, as specified by the Act. Accordingly, as of December 31, 2018 and 2017, $968 million and $1.2 billion of our liability for deemed repatriation of foreign earnings was included in other liabilities on our consolidated balance sheet.

The remaining provisional amount of $1.7 billion was for the deferred income tax effects of the Act, primarily the impact of the new U.S. minimum tax on foreign earnings, partially offset by the reversal of our existing deferred tax liability associated with repatriation of unremitted foreign earnings. We completed our analysis of the components of the deferred tax computation in the fourth quarter of 2018 and recognized a tax benefit of $445 million as a reduction to the provisional amounts recorded in the fourth quarter of 2017 for the deferred income tax effects of the Act. This amount includes a $389 million tax benefit as a result of clarification by Swiss tax authorities regarding the applicability of withholding tax to repatriated earnings in October 2018.

We completed our analysis of the impacts of U.S. tax reform in the fourth quarter of 2018. Accordingly, we have recognized the tax consequences of all foreign unremitted earnings and management has no specific plans to indefinitely reinvest the unremitted earnings of our foreign subsidiaries as of the balance sheet date. We have not provided for deferred taxes on outside basis differences in our investments in our foreign subsidiaries that are unrelated to unremitted earnings. These basis differences will be indefinitely reinvested. A determination of the unrecognized deferred taxes related to these other components of our outside basis difference is not practicable.

The following table reflects changes in unrecognized tax benefits for the years ended December 31, 2018, 2017 and 2016 (in millions):



	2018			2017			2016
Gross amounts of unrecognized tax benefits as of the beginning of the period	$	487		$	458		$	440
Increases related to prior period tax positions	64			37			24
Decreases related to prior period tax positions	(10		)	(28		)	(20		)
Increases related to current period tax positions	28			58			47
Settlements	(18		)	(38		)	(33		)
Gross amounts of unrecognized tax benefits as of the end of the period	$	551		$	487		$	458

Included within our gross amounts of unrecognized tax benefits of $551 million as of December 31, 2018 is $100 million of unrecognized tax benefits indemnified by PayPal. If total unrecognized tax benefits were realized in a future period, it would result in a tax benefit of $466 million. Of this amount, approximately $95 million of unrecognized tax benefit is indemnified by PayPal and a corresponding receivable would be reduced upon a future realization. As of December 31, 2018, our liabilities for unrecognized tax benefits were included in other liabilities on our consolidated balance sheet.

We recognize interest and/or penalties related to uncertain tax positions in income tax expense. In 2018, $14 million was included in tax expense for interest and penalties. The amount of interest and penalties accrued as of December 31, 2018 and 2017 was approximately $61 million and $43 million, respectively.

We are subject to both direct and indirect taxation in the U.S. and various states and foreign jurisdictions. We are under examination by certain tax authorities for the 2008 to 2016 tax years. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these or other examinations. The material jurisdictions where we are subject to potential examination by tax authorities for tax years after 2007 include, among others, the U.S. (Federal and California), Germany, Korea, Israel, Switzerland, United Kingdom and Canada.

Although the timing of the resolution and/or closure of audits is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. Given the number of years remaining subject to examination and the number of matters being examined, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. We do expect the gross amount of unrecognized tax benefits to be reduced within the next twelve months by at least $196 million.

On July 27, 2015, in Altera Corp. v. Commissioner, the U.S. Tax Court issued an opinion invalidating the regulations relating to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision was issued by the Tax Court in December 2015. The IRS appealed the decision in June 2016. On July 24, 2018, the Ninth Circuit Federal Court issued a decision that was subsequently withdrawn and a reconstituted panel has conferred on the appeal. No decision had been made at the time of the release of these financial statements. Due to the uncertainty surrounding the status of the current regulations, questions related to the scope of potential benefits or obligations, and the risk of the Tax Court’s decision being overturned upon appeal, we have not recorded any benefit or expense as of December 31, 2018. We will continue to monitor ongoing developments and potential impacts to our consolidated financial statements.

Interest and Other, Net

12 Months Ended

Dec. 31, 2018

Nonoperating Income (Expense) [Abstract]

Interest and Other, Net

The components of interest and other, net for the years ended December 31, 2018, 2017 and 2016 are as follows (in millions):



	Year Ended December 31,
	2018			2017			2016
Interest income	$	176		$	177		$	125
Interest expense	(326		)	(292		)	(225		)
Gains on investments and sale of business ⁽¹⁾	663			115			1,343
Other	(17		)	11			83
Total interest and other, net	$	496		$	11		$	1,326

(1)

Gains on investments and sale of business includes: (i) a $313 million gain on the sale of our equity investment in Flipkart, a $266 million gain recognized upon the relinquishment of our equity investment in Giosis and a $104 million gain recognized due to the change in fair value of the warrant in 2018; (ii) a $167 million gain on disposal of our eBay India business in 2017; and (iii) $1.3 billion of pre-tax gains recognized from the sale of our equity holdings of MercadoLibre, Inc. in 2016.

Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Accumulated Other Comprehensive Income

The following tables summarize the changes in AOCI for the years ended December 31, 2018 and 2017 (in millions):



	Unrealized Gains (Losses) on Derivative Instruments			Unrealized Gains (Losses) on Investments			Foreign Currency Translation			Estimated Tax (Expense) Benefit			Total
Balance as of December 31, 2017	$	(57	)	$	(15	)	$	748		$	41		$	717
Other comprehensive income (loss) before reclassifications	117			(42		)	(286		)	(15		)	(226		)
Less: Amount of gain (loss) reclassified from AOCI	(8		)	(1		)	—			2			(7		)
Net current period other comprehensive income (loss)	125			(41		)	(286		)	(17		)	(219		)
Balance as of December 31, 2018	$	68		$	(56	)	$	462		$	24		$	498



	Unrealized Gains (Losses) on Derivative Instruments			Unrealized Gains (Losses) on Investments			Foreign Currency Translation			Estimated Tax (Expense) Benefit		Total
Balance as of December 31, 2016	$	54		$	51		$	(230	)	$	1	$	(124	)
Other comprehensive income before reclassifications	(104		)	(59		)	978			40		855
Less: Amount of gain (loss) reclassified from AOCI	7			7			—			—		14
Net current period other comprehensive income	(111		)	(66		)	978			40		841
Balance as of December 31, 2017	$	(57	)	$	(15	)	$	748		$	41	$	717

The following table provides a summary of reclassifications out of AOCI for the years ended December 31, 2018 and 2017 (in millions):



Details about AOCI Components	Affected Line Item in the Statement of Income	Amount of Gain (Loss) Reclassified from AOCI
		2018			2017
Gains (losses) on cash flow hedges - foreign exchange contracts	Net Revenues	$	(8	)	$	(28	)
	Cost of net revenues	—			3
	Sales and marketing	—			1
	Product development	—			5
	General and administrative	—			2
	Interest and other, net	—			24
	Total, from continuing operations before income taxes	(8		)	7
	Income tax provision	2			—
	Total, from continuing operations net of income taxes	(6		)	7
	Total, from discontinued operations net of income taxes	—			—
	Total, net of income taxes	(6		)	7

Unrealized gains (losses) on investments	Interest and other, net	(1		)	7
	Total, before income taxes	(1		)	7
	Income tax provision	—			—
	Total, net of income taxes	(1		)	7

Total reclassifications for the period	Total, net of income taxes	$	(7	)	$	14

Restructuring

12 Months Ended

Dec. 31, 2018

Restructuring and Related Activities [Abstract]

Restructuring

The following table summarizes restructuring reserve activity during 2018 (in millions):



	Employee Severance and Benefits
Accrued liability as of January 1, 2018	$	—
Charges	86
Payments	(61		)
Other	(17		)
Accrued liability as of December 31, 2018	$	8

In June 2018, management approved a plan to implement a strategic reduction of our existing global workforce. The reduction was substantially completed in the second quarter of 2018. We incurred pre-tax restructuring charges of approximately $86 million. The restructuring charges, which primarily related to employee severance and benefits, were aggregated in general and administrative expenses in the consolidated statement of income. Other adjustments were primarily related to settlements of previous contractual commitments in the second quarter of 2018. No restructuring charges were recognized during 2017 and 2016.

Supplementary Data - Quarterly Financial Data - Unaudited

12 Months Ended

Dec. 31, 2018

Quarterly Financial Data [Abstract]

Supplementary Data — Quarterly Financial Data — Unaudited

The following tables present certain unaudited consolidated quarterly financial information for each of the eight quarters in the two year period ended December 31, 2018. This quarterly information has been prepared on the same basis as the Consolidated Financial Statements and includes all adjustments necessary to state fairly the information for the periods presented. 2017 has been recast to reflect Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

Quarterly Financial Data

(Unaudited, in millions, except per share amounts)



	Quarter Ended
	March 31		June 30		September 30		December 31
2018
Net revenues	$	2,580	$	2,640	$	2,649	$	2,877
Gross profit	$	2,021	$	2,043	$	2,041	$	2,259
Income from continuing operations	$	407	$	638	$	720	$	763
Income (loss) from discontinued operations, net of income taxes	—		4		1		(3		)
Net income (loss)	$	407	$	642	$	721	$	760
Income (loss) per share - basic:
Continuing operations	$	0.40	$	0.64	$	0.74	$	0.81
Discontinued operations	—		—		—		—
Net income (loss) per share - basic	$	0.40	$	0.64	$	0.74	$	0.81
Income (loss) per share - diluted:
Continuing operations	$	0.40	$	0.64	$	0.73	$	0.80
Discontinued operations	—		—		—		—
Net income (loss) per share - diluted	$	0.40	$	0.64	$	0.73	$	0.80
Weighted-average shares:
Basic	1,010		992		974		945
Diluted	1,029		1,004		983		950



	Quarter Ended
	March 31		June 30		September 30		December 31
2017
Net revenues	$	2,303	$	2,419	$	2,498	$	2,707
Gross profit	$	1,789	$	1,859	$	1,941	$	2,117
Income (loss) from continuing operations	$	1,035	$	29	$	520	$	(2,597	)
Income from discontinued operations, net of income taxes	—		—		—		(4		)
Net income	$	1,035	$	29	$	520	$	(2,601	)
Income per share - basic:
Continuing operations	$	0.96	$	0.03	$	0.49	$	(2.51	)
Discontinued operations	—		—		—		—
Net income (loss) per share - basic	$	0.96	$	0.03	$	0.49	$	(2.51	)
Income (loss) per share - diluted:
Continuing operations	$	0.94	$	0.03	$	0.48	$	(2.51	)
Discontinued operations	—		—		—		—
Net income (loss) per share - diluted	$	0.94	$	0.03	$	0.48	$	(2.51	)
Weighted-average shares:
Basic	1,083		1,076		1,062		1,035
Diluted	1,102		1,091		1,078		1,035

Financial Statement Schedule

12 Months Ended

Dec. 31, 2018

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Financial Statement Schedule

FINANCIAL STATEMENT SCHEDULE

The Financial Statement Schedule II — VALUATION AND QUALIFYING ACCOUNTS as of and for the years ended December 31, 2018, 2017 and 2016.



	Balance at Beginning of Period		Charged/Credited to Net Income			Charged to Other Account		Charges Utilized/Write-offs			Balance at End of Period
	(In millions)
Allowances for Doubtful Accounts and Authorized Credits
Year Ended December 31, 2016	$	84	$	68		$	—	$	(71	)	$	81
Year Ended December 31, 2017	81		91			—		(70		)	102
Year Ended December 31, 2018	$	102	$	92		$	—	$	(88	)	$	106

Allowance for Transaction Losses
Year Ended December 31, 2016	$	34	$	162		$	—	$	(173	)	$	23
Year Ended December 31, 2017	23		181			—		(179		)	25
Year Ended December 31, 2018	$	25	$	194		$	—	$	(191	)	$	28

Tax Valuation Allowance
Year Ended December 31, 2016	$	41	$	(6	)	$	2	$	—		$	37
Year Ended December 31, 2017	37		(20		)	2		—			19
Year Ended December 31, 2018	$	19	$	33		$	13	$	—		$	65

The Company and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Use of estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to provisions for transaction losses, legal contingencies, income taxes, revenue recognition, stock-based compensation, investments, goodwill and the recoverability of intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

Principles of consolidation and basis of presentation

Principles of Consolidation and Basis of Presentation

The accompanying financial statements are consolidated and include the financial statements of eBay Inc., our wholly and majority-owned subsidiaries and variable interest entities (“VIE”) where we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Minority interests are recorded as a noncontrolling interest. A qualitative approach is applied to assess the consolidation requirement for VIEs. Investments in entities where we hold at least a 20% ownership interest and have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting. For such investments, our share of the investees’ results of operations is included in interest and other, net and our investment balance is included in long-term investments. Investments in entities where we hold less than a 20% ownership interest are generally accounted for as equity investments to be measured at fair value or, under an election, at cost if it does not have readily determinable fair value, in which case the carrying value would be adjusted upon the occurrence of an observable price change or impairment.

Certain prior period amounts have been reclassified on our consolidated financial statements to conform with current year presentation. We have evaluated all subsequent events through the date the consolidated financial statements were issued.

Revenue recognition

We recognize revenue when we transfer control of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Revenue is recognized net of any taxes collected, which are subsequently remitted to governmental authorities.

Net transaction revenues

Our net transaction revenues primarily include final value fees, feature fees, including fees to promote listings, and listing fees from sellers in our Marketplace and final value fees from sellers and buyers on our StubHub platforms. Our net transaction revenues also include store subscription and other fees often from large enterprise sellers. Our net transaction revenues are reduced by incentives provided to our customers.

We identified one performance obligation to sellers on our Marketplace platform, which is to connect buyers and sellers on our secure and trusted Marketplace platforms. Final value fees are recognized when an item is sold on a Marketplace platform, satisfying this performance obligation. There may be additional services available to Marketplace sellers, mainly to promote or feature listings, that are not distinct within the context of the contract. Accordingly, feature and listing fees associated with these services are recognized when the single performance obligation is satisfied when an item is sold, or when the contract expires. On our StubHub platform, our performance obligation extends to both buyers and sellers. We made the policy election to consider delivery of tickets in our StubHub platform to be fulfillment activities and, consequently, the performance obligation is satisfied, and final value fees are recognized, upon payment to sellers.

Store subscription and other nonstandard listing contracts may contain multiple performance obligations, including discounts on future services. Determining whether performance obligations should be accounted for separately or combined may require significant judgment. The transaction price is allocated to each performance obligation based on its stand-alone selling price (“SSP”). In instances where SSP is not directly observable, we generally estimate selling prices based on when they are sold to customers of a similar nature and geography. These estimates are generally based on pricing strategies, market factors, strategic objectives and observable inputs. Store subscription revenues are recognized over the subscription period, and discounts offered through store subscription or nonstandard listing contracts are recognized when the options are exercised or when the options expire.

Further, to drive traffic to our platforms, we provide incentives to buyers and sellers in various forms including discounts on fees, discounts on items sold, coupons and rewards. Evaluating whether a promotion or incentive is a payment to a customer may require significant judgment. Promotions and incentives which are consideration payable to a customer are recognized as a reduction of revenue at the later of when revenue is recognized or when we pay or promise to pay the incentive. Promotions and incentives to most buyers on our Marketplace platforms, to whom we have no performance obligation, are recognized as sales and marketing expense. In addition, we may provide credits to customers when we refund certain fees. Credits are accounted for as variable consideration at contract inception when estimating the amount of revenue to be recognized when a performance obligation is satisfied to the extent that it is probable that a significant reversal of revenue will not occur and updated as additional information becomes available.

Marketing services and other revenues

Our marketing services and other revenues are derived principally from the sale of advertisements, classifieds fees, and revenue sharing arrangements. Advertising revenue is derived principally from the sale of online advertisements which are based on “impressions” (i.e., the number of times that an advertisement appears in pages viewed by users of our platforms) or “clicks” (which are generated each time users on our platforms click through our advertisements to an advertiser’s designated website) delivered to advertisers. We use the output method and apply the practical expedient to recognize advertising revenue in the amount to which we have a right to invoice. For contracts with target advertising commitments with rebates, estimated payout is accounted for as a variable consideration to the extent it is probable that a significant reversal of revenue will not occur.

We generate net revenues related to fees for listing items on our Classifieds platforms, which are recognized over the estimated period of the classifieds listing and fees to feature the listing that are recognized over the feature

period or a point in time depending on the nature of the feature purchased. Discounts offered through purchase of packages of multiple services are allocated based on the SSP of each respective feature.

Revenues related to revenue sharing arrangements are recognized based on whether we are the principal and are responsible for fulfilling the promise to provide the specified services or whether we are an agent arranging for those services to be provided by our partners. Determining whether we are a principal or agent in these contracts may require significant judgment. If we are the principal, we recognize revenue in the gross amount of consideration received from the customer, whereas if we are an agent, we recognize revenue net of the consideration due to our partners at a point in time when the services are provided. Our most significant revenue share arrangements are with shipping service providers. We are primarily acting as an agent in these contracts and revenues are recognized at a point in time when we have satisfied our promise of connecting the shipping service provider to our customer.

Refer to “Note 5 - Segments” for further information, including revenue by types and geographical markets.

Contract balances

Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represents amounts invoiced and revenue recognized prior to invoicing when we have satisfied our performance obligation and have the unconditional right to payment. The allowance for doubtful accounts and authorized credits is estimated based upon our assessment of various factors including historical experience, the age of the accounts receivable balances, current economic conditions and other factors that may affect our customers’ ability to pay. The allowance for doubtful accounts and authorized credits was $106 million and $102 million as of December 31, 2018 and December 31, 2017, respectively.

Deferred revenue consists of fees received related to unsatisfied performance obligations at the end of the period. Due to the generally short-term duration of contracts, the majority of the performance obligations are satisfied in the following reporting period. The amount of revenue recognized for the twelve months ended December 31, 2018 that was included in the deferred revenue balance at the beginning of the period was $96 million.

Internal use software and platform development costs

Direct costs incurred to develop software for internal use and platform development costs are capitalized and amortized over an estimated useful life of one to five years.Costs related to the design or maintenance of internal use software and platform development are expensed as incurred.

Advertising expense

We expense the costs of producing advertisements at the time production occurs and expense the cost of communicating advertisements in the period during which the advertising space or airtime is used, in each case as sales and marketing expense. Internet advertising expenses are recognized based on the terms of the individual agreements, which are generally over the greater of the ratio of the number of impressions delivered over the total number of contracted impressions, on a pay-per-click basis, or on a straight-line basis over the term of the contract.

Stock-based compensation

We have equity incentive plans under which we grant equity awards, including stock options, restricted stock units (“RSUs”), performance-based restricted stock units, and performance share units, to our directors, officers and employees. We primarily issue RSUs. We determine compensation expense associated with RSUs based on the fair value of our common stock on the date of grant. We determine compensation expense associated with stock options based on the estimated grant date fair value method using the Black-Scholes valuation model. We generally recognize compensation expense using a straight-line amortization method over the respective vesting period for awards that are ultimately expected to vest. Accordingly, stock-based compensation expense for 2018, 2017 and 2016 has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of actual option forfeitures. We recognize a benefit or provision from stock-based compensation in earnings as a component of income tax expense to the extent that an incremental tax benefit or deficiency is realized by following the ordering provisions of the tax law. In addition, we account for the indirect effects of stock-based compensation on the research tax credit and the foreign tax credit through our consolidated statement of income.

Provision for transaction losses

Provision for transaction losses consists primarily of losses resulting from our buyer protection programs, fraud and bad debt expense associated with our accounts receivable balance. Provisions for these items represent our estimate of actual losses based on our historical experience and many other factors including changes to our protection programs, the impact of regulatory changes as well as economic conditions.

Income taxes

We account for income taxes using an asset and liability approach, which requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns. The measurement of current and deferred tax assets and liabilities is based on provisions of enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. If necessary, the measurement of deferred tax assets is reduced by the amount of any tax benefits that are not expected to be realized based on available evidence.

We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

We accounted for the tax effects of The Tax Cuts and Jobs Act, enacted on December 22, 2017, on a provisional basis in our 2017 consolidated financial statements. We completed our accounting in the fourth quarter of 2018 within the one year measurement period from the enactment date.

Cash and cash equivalents

Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less when purchased and are primarily comprised of bank deposits and certificates of deposit.

Investments

Short-term investments, which may include marketable equity securities, time deposits, certificates of deposit, government bonds and corporate debt securities with original maturities of greater than three months but less than one year when purchased, are classified as available-for-sale and are reported at fair value using the specific identification method. Unrealized gains and losses related to equity securities are recognized in interest & other, net, with all other unrealized gains and losses reported as a component of other comprehensive income (loss), net of related estimated income tax provisions or benefits.

Long-term investments may include marketable government bonds and corporate debt securities, time deposits, certificates of deposit and equity investments. Debt securities are classified as available-for-sale and are reported at fair value using the specific identification method. Unrealized gains and losses on our available-for-sale debt securities are excluded from earnings and reported as a component of other comprehensive income (loss), net of related estimated income tax provisions or benefits.

Our equity investments are primarily investments in privately-held companies. Our consolidated results of operations include, as a component of interest and other, net, our share of the net income or loss of the equity investments accounted for under the equity method of accounting. Our share of investees’ results of operations is not significant for any period presented. Equity investments without readily determinable fair values are accounted for at cost, less impairment and adjusted for subsequent observable price changes obtained from orderly transactions for identical or similar investments issued by the same investee. Such changes in the basis of the equity investment are recognized in interest & other, net.

We assess whether an other-than-temporary impairment loss on our investments has occurred due to declines in fair value or other market conditions. With respect to our debt securities, this assessment takes into account the severity and duration of the decline in value, our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, and whether we expect to recover the entire amortized cost basis of the security (that is, whether a credit loss exists).

Property and equipment

Property and equipment are stated at historical cost less accumulated depreciation. Depreciation for equipment, buildings and leasehold improvements commences once they are ready for our intended use. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally, one to three years for computer equipment and software, up to thirty years for buildings and building improvements, the shorter of five years or the term of the lease for leasehold improvements and three years for furniture, fixtures and vehicles.

Goodwill and intangible assets

Goodwill is tested for impairment at a minimum on an annual basis. Goodwill is tested for impairment at the reporting unit level. A qualitative assessment can be performed to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using income and market approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow method, a form of the income approach, uses expected future operating results and a market participant discount rate. The market approach uses comparable company prices and other relevant information generated by market transactions (either publicly traded entities or mergers and acquisitions) to develop pricing metrics to be applied to historical and expected future operating results of our reporting units. Failure to achieve these expected results, changes in the discount rate or market pricing metrics may cause a future impairment of goodwill at the reporting unit. We conducted our annual impairment test of goodwill as of August 31, 2018 and 2017 and determined that no adjustment to the carrying value of goodwill for any reporting units was required.

Intangible assets consist of purchased customer lists and user base, marketing related, developed technologies and other intangible assets, including patents and contractual agreements. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to five years. No significant residual value is estimated for intangible assets.

Impairment of long-lived assets

We evaluate long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset is expected to generate.

Foreign currency

Most of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated into U.S. dollars using exchange rates prevailing at the balance sheet date, while revenues and expenses are translated at average exchange rates during the year. Gains and losses resulting from the translation of our consolidated balance sheet are recorded as a component of accumulated other comprehensive income.

Gains and losses from foreign currency transactions are recognized as interest and other, net.

Derivative instruments

We use derivative financial instruments, primarily forwards, options and swaps, to hedge certain foreign currency and interest rate exposures. We may also use other derivative instruments not designated as hedges, such as forwards to hedge foreign currency balance sheet exposures. We do not use derivative financial instruments for trading purposes.

We also entered into a warrant agreement in addition to a commercial agreement with a service provider that, subject to meeting certain conditions, entitles us to acquire a fixed number of shares up to 5% of the service provider’s fully diluted issued and outstanding share capital at a specific date. The warrant is accounted for as a derivative instrument under ASC Topic 815, Derivatives and Hedging.

See “Note 7 - Derivative Instruments” for a full description of our derivative instrument activities and related accounting policies.

Concentration of credit risk

Our cash, cash equivalents, accounts receivable and derivative instruments are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with financial institutions that management believes are of high credit quality. Our accounts receivable are derived from revenue earned from customers.

Recent accounting pronouncements

Recently Adopted Accounting Pronouncements

In 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to revenue recognition. This new standard replaces all current GAAP guidance on this topic and eliminates all industry-specific guidance. The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In 2016, the FASB issued several amendments to the standard, including principal versus agent considerations when another party is involved in providing goods or services to a customer and the application of identifying performance obligations. We adopted the standard effective January 1, 2018 using the full retrospective transition method and recast each prior reporting period presented. The cumulative adjustment to retained earnings as of January 1, 2016 was immaterial.

Under the new standard, we identified one performance obligation related to the core service offered to sellers on our Marketplace platform and believe additional services, mainly to promote or feature listings at the option of sellers, are not distinct within the context of the contract. Accordingly, certain fees paid by sellers for these services will be recognized when the single performance obligation is satisfied or when the contract expires resulting, in some cases, in a change in the timing of recognition. In addition, we made the policy election to consider delivery of tickets in our StubHub business to be fulfillment activities and, consequently, the performance obligation is considered to be satisfied upon payment to sellers. The impact of this policy election will allow an acceleration of revenue recognition for certain users. The total impact resulting from the change in timing of recognition for both the Marketplace and StubHub platforms was an immaterial net change in transaction revenue for both the twelve month periods ended December 31, 2017 and 2016, and an increase in deferred revenue of $20 million and $19 million as of December 31, 2017 and 2016, respectively.

Further, certain incentives, such as coupons and rewards provided to certain users from which we do not earn revenue within the context of the identified contract, of $363 million and $323 million for the twelve months ended December 31, 2017 and 2016, respectively, was recognized as sales and marketing expenses, which historically was recorded as a reduction of revenue.

Adoption of this guidance impacted our previously reported results as follows (in millions, except per share data):



	Year Ended December 31, 2017						Year Ended December 31, 2016
	As Reported			As Adjusted			As Reported		As Adjusted
Net revenues	$	9,567		$	9,927		$	8,979	$	9,298
Cost of net revenues	$	2,222		$	2,221		$	2,007	$	2,004
Sales and marketing	$	2,515		$	2,878		$	2,368	$	2,691
Net income (loss)	$	(1,016	)	$	(1,017	)	$	7,266	$	7,266

Net income (loss) per share - basic	$	(0.95	)	$	(0.95	)	$	6.41	$	6.41

Net income (loss) per share - diluted	$	(0.95	)	$	(0.95	)	$	6.35	$	6.35