|Mon Jan 9 2012 09:11:04|
Does eBay Violate Antitrust Laws by Forcing Sellers to Use PayPal
By: Ina Steiner
According to allegations in the antitrust Smith v eBay lawsuit, "While eBay lists purported alternative payment methods, eBay has through its intentional action made it so PayPal is the only viable option for sellers." There are also two other lawsuits against PayPal over antitrust issues - so what's going on?
eBay sellers claim they are forced to pay an additional 3% commission fee plus 30 cents per transaction because eBay forces them to use its PayPal online payment service and have banned other forms of payment. (See today's Newsflash story for more details.)
Smith's lawsuit summarizes eBay's actions that increasingly limited sellers ability to accept any service other than PayPal:
- eBay's 2005 acquisition of Verisign - EcommerceBytes news story;
- eBay's 2006 ban on Google Checkout - EcommerceBytes news story;
- eBay's 2007 elimination of buyer protection for non-PayPal transactions - EcommerceBytes news story;
- eBay's 2008 ban on checks, money orders and any other non-electronic payment method - EcommerceBytes news story;
- eBay's 2008 acquisition of Bill Me Later - EcommerceBytes news story.
One thing that is a bit puzzling in the judge's ruling last week (in which he granted in part and denied in part eBay's motion to dismiss) is this statement: "the Court concludes that Plaintiffs have failed to allege facts showing that the alleged tie caused harm to competitors in the tied product market. Because Plaintiffs may be able to allege such facts, the Court shall grant them one final opportunity to amend."
Not being a lawyer, I can only surmise that this means the plaintiffs did not show how PayPal competitors have been hurt by these policies. But the plaintiffs clearly mention eBay's ban on Google Checkout - it seems obvious to me this greatly harmed Google! (Google even submitted a complaint to the Australian government when eBay Australia tried to go PayPal-only.)
It also seems obvious that eBay's policy of not extending buyer protection to the few overseas payment methods eBay.com does allow on its site hurts those providers.
Without going back and reading the three lawsuits again, I believe the plaintiffs may have forgotten one of the harms that eBay's Accepted Payments policy has on their business: loss of sales from buyers who don't have or won't use PayPal.
In September 2008, I interviewed syndicated columnist and antiques expert Harry Rinker (who had hosted a television show). "I will be damned to hell if I am going to allow eBay to dictate how I should pay for my purchases," he had written in his column. "My checks are good, none bounced. I am taking my business elsewhere."
While antiques shoppers have several alternatives to eBay - Ruby Lane, TIAS and UK auction site eBid.net, for example, there clearly is no alternative to eBay available to small sellers that get them the volume of sales that eBay does.
Over the past 5 years or so, have you been impacted by eBay's Accepted Payments policy? And is this a matter for the courts? And can you think of a legal argument against eBay's policy of collecting fees on shipping costs?