EcommerceBytes-NewsFlash, Number 2099 - August 11, 2009     1 of 3

Antitrust Doc Alleges eBay Sought Alliances to Fend off Google

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A filing in the eBay Seller Antitrust Litigation reads part like Sun Tzu's "The Art of War," part "Survivor" plot. According to the plaintiff's motion for class certification, eBay talked to Google, Yahoo and Amazon.com and, the document alleges, entered into alliances with some in order to try and restrict competition. "eBay has also demonstrated a pattern and practice of approaching other online firms to reach agreement to forestall or restrict competition with eBay's core, online auction service," the document claims.

The plaintiffs in the antitrust lawsuit allege that eBay, upon hearing that Google was developing Google Checkout, tried to form a partnership with Google "to avoid or blunt competition with this emerging threat," and that then CEO Meg Whitman urged Google's CEO to consider placating each others' core interests and avoid head-to-head competition. The document redacts her statement then states, "In other words, if Google expanded from its search business to threaten eBay's marketplace business, eBay would, at the very least, react punitively by "rethinking" its commercial alliance and the money eBay spends on advertising through Google."

eBay did cut back on Google advertising in a spat between the companies in June 2007 in the famous "Boston Tea Party" brouhaha; and one year later, an anonymous filing with an Australia regulatory agency later found to be submitted by Google stated that eBay's purpose in going to a PayPal-only policy in Australia was "to substantially lessen competition in the Market for Online Payment Processing Services, by preventing or hindering competitors of PayPal from competing effectively against PayPal in that market."

The antitrust filing redacts excerpts of confidential documents, including internal emails sent by eBay and PayPal executives. For example, the document says that after eBay acquired PayPal, "eBay employees internally mocked Wall Street's failure to understand the truly anticompetitive nature of the acquisition," but the next paragraph is blocked out.

The document also alleges that eBay sought to cut deals with Yahoo and Amazon. It alleges that eBay entered into an agreement with Yahoo designed to restrain competition, and cites the agreement between eBay and Yahoo in May 2006 in which PayPal became the exclusive payment provider on Yahoo Wallet.

It then goes on to allege that eBay approached Amazon in the spring of 2007 and attempted to "form a troika against Google" with Yahoo and says that "in August 2007, while Amazon and eBay were still in discussions, Amazon announced its own payments service, Checkout by Amazon." eBay's reaction, the document alleges, was to offer Amazon a sum of money in return for exclusivity on PayPal versus both Google and then-stand-alone service BillMeLater. The amount of the payment is redacted but followed by the word "million."

It also claims that earlier, in 2001, "eBay and Yahoo entered into an illegal territorial division of the EU online market, whereby eBay and Yahoo cut a deal to shut down Yahoo's European online auction platform."

The plaintiffs have a few hurdles to jump; first, they must win class certification, and then they must win any motions filed by eBay to dismiss the case. If successful, the case could conceivably go to jury trial next year.

A hearing on Class Certification is scheduled for October 16, 2009.

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About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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