EBay





eBay is a successful online auction website, at which people from all around
the world buy and sell goods and services.

Millions of collectibles, knickknacks, doodads, appliances, computers,
furniture, equipment, vehicles and etceteras are listed, bought and sold
daily. Some items are rare and valuable, while many other dusty gizmos would
have been discarded if not for the thousands of eager bidders worldwide, who
seemingly collect everything. A recent search of eBay uncovered thousands of
passe beanie babies and hundreds of vintage Kewpie Dolls. It is fair to say
that eBay has revolutionized collectibles markets, by bringing together
buyers and sellers internationally in a huge, never-ending yard sale and
auction. Large, international companies, such as IBM, sell their newest
products and offer services on eBay using competitive auctions and
fixed-priced storefronts.

eBay generates revenue from sellers, who pay a two to seven percent premium
on each item, and from advertising. It does not handle the goods, nor does
it transact the buyer-seller payment, except through its subsidiary PayPal.
Instead, much like newspaper want-ads, sellers rely on the buyer's good
faith to make payment, and buyers rely on the sellers' good faith to
actually deliver the goods intact. To encourage fidelity, eBay maintains,
rates and publicly displays the post-transaction feedback from all users,
whether they buy or sell. This way, the buyer is encouraged to examine the
sellers' feedback profile before bidding to rate their trustworthiness.
Sellers with high ratings generally have more bids and garner higher bids.

Caveat Emptor

eBay has its share of controversy, ranging from its privacy policy (eBay
typically turns over user information to law enforcement without a subpoena)
to well-publicized seller fraud, though statistically fewer than 1 in 200
transactions fail.

On 28 May 2003 a US District Court federal jury found eBay guilty of patent
infringement and ordered the company to pay US$35 million in damages. The
jury found for plaintiff MercExchange, which had accused eBay in 2001 of
infringing on three patents (two of which are used in eBay's "Buy It Now"
feature for fixed-price sales) held by MercExchange founder Tom Woolston.

On 28 July 2003 ebay and its subsidiary PayPal agreed to pay a $10 million
fine to settle allegations they aided illegal offshore and online gambling.
According to the settlement, PayPal between mid-2000 and November 2002
transmitted money in violation of various US federal and state online
gambling laws.