Ebay

Sales occur either via online auctions or "buy it now" instant sales, and the company charges commissions to sellers upon sales. eBay was founded by Pierre Omidyar in September 1995. It has 134 million yearly active buyers worldwide and handled $74 billion in transactions in 2022, 49% of which was in the United States. In 2022, the company had a take rate (revenue as a percentage of volume) of 13.25%.

eBay Inc.

Wiki English
Wiki English Headquarters in the Willow Glen district of San Jose, California
Formerly	AuctionWeb (1995–1997)
Company type	Public
Traded as	Nasdaq: EBAY S&P 500 component
Industry	E-commerce
Founded	September 3, 1995; 28 years ago (1995-09-03)
Founder	Pierre Omidyar
Headquarters	San Jose, California, U.S.
Area served	Worldwide
Key people	Paul Pressler (chairman) Jamie Iannone (president​ and CEO)
Services	Online shopping
Revenue	US$10.11 billion (2023)
Operating income	US$1.941 billion (2023)
Net income	US$2.767 billion (2023)
Total assets	US$21.62 billion (2023)
Total equity	US$6.396 billion (2023)
Number of employees	c. 12,300 (2023)
Subsidiaries	Qoo10
Website	www.ebay.com
Footnotes / references

eBay is used by individuals, companies, as well as governments to purchase and sell almost any legal, non-controversial item. eBay's auctions use a Vickrey auction (sealed-bid) proxy bid system. Buyers and sellers may rate and review each other after each transaction, resulting in a reputation system. The eBay service is accessible via websites and mobile apps. Software developers can create applications that integrate with eBay through the eBay API. Merchants can also earn commissions from affiliate marketing programs by eBay.

 

1990s

eBay was founded as AuctionWeb in California on September 3, 1995, by French-born Iranian-American computer programmer Pierre Omidyar as a hobby to make some extra money. One of the first items sold on AuctionWeb was a broken laser pointer for $14.83. Astonished, Omidyar contacted the winning bidder to ask if he understood that the laser pointer was broken; the buyer explained: "I'm a collector of broken laser pointers."

In February 1996, Omidyar's internet service provider informed him that he would need to upgrade to a business account due to the high web traffic of his website. The monthly price increase from $30 to $250 prompted Omidyar to start charging eBay users. The website made $1,000 in its first month, which was more than it cost to run, and $2,500 in its second month. Chris Agarpao was eBay's first employee; he processed mailed check payments.

Jeffrey Skoll was hired as the first president of the company in early 1996. In November 1996, the company launched online auctions for airline seats, hotel rooms, cruise berths and other travel-related products in partnership with Electronic Travel Auctions. By that time, the company had hosted more than 200,000 auctions since its founding 14 months earlier.

The company changed the name of its service from AuctionWeb to eBay in September 1997, after Echo Bay Technology Group, Omidyar's consulting firm. The echobay.com domain name was already registered by Echo Bay Mines, a gold mining company, so Omidyar shortened it to eBay.com. In 1997, the company received $6.7 million in venture capital funding from Benchmark.

The frequently repeated story that eBay was founded to help Omidyar's fiancée trade Pez candy dispensers was fabricated in 1997 by public relations manager Mary Lou Song to give the media a human-interest story and to generate publicity with toy collectors.

The most purchased and sold items on the website were Beanie Babies, the most difficult toys to find in retail stores, accounting for 10% of all listings in 1997. Ty, the manufacturer, had set up a website whereby people could trade used Beanie Babies. However, it was overwhelmed with unsortable listings. With a user-friendly interface, eBay became popular with collectors.

Meg Whitman was appointed president and CEO in March 1998. At the time, the company had 30 employees, 500,000 users, and revenues of $4.7 million in the United States.

In July 1998, eBay acquired Jump, the developer and operator of Up4Sale, an advertising-supported auction website which at the time had 27,000 separate auctions and 50,000 registered members.

In September 1998, during the dot-com bubble, eBay became a public company via an initial public offering led by CFO Gary F. Bengier. Upon the initial public offering, which was priced at $18 per share and closed for trading on its first day at $53 per share, both Omidyar and Skoll became billionaires.

In the risk factors section of the annual report filed with the U.S. Securities and Exchange Commission in 1998, Omidyar noted eBay's dependence on the continued strength of the Beanie Babies market.

2000s

In June 2000, eBay acquired Half.com for $312 million in stock.

In 2000, eBay partnered with Escrow.com to handle escrow for purchases and sales of motor vehicles, later expanded to other transaction types. By year-end, it had 22.5 million registered users and 79.4 million auctions per quarter.

In January 2001, eBay acquired a majority stake in Internet Auction Co. Ltd, operator of the largest internet auction website in South Korea.

In February 2002, eBay acquired iBazar, a French online auction site founded in 1998, for approximately $112 million in stock.

eBay entered the Chinese market in 2002 and shut down its Chinese site in 2007 due to competition from local rival Taobao.

In February 2002, eBay exited Japan due to competition from Yahoo! Japan and began operations in Taiwan with the acquisition of NeoCom Technology for $9.5 million. In June 2006, eBay turned over its operations in Taiwan to a joint venture partner.

 

eBay acquired PayPal on October 3, 2002 for $1.4 billion.

On May 28, 2003, in the case of eBay Inc. v. MercExchange, L.L.C., which had implications for the treatment of business method patents, a United States district court jury found eBay guilty of willful patent infringement and ordered the company to pay $35 million in damages after MercExchange accused eBay of infringing on three patents, one of which is used in eBay's "Buy It Now" feature. The decision was appealed to the United States Court of Appeals for the Federal Circuit (CAFC). The CAFC affirmed the judgment of willful infringement, and reversed the lower court and granted a permanent injunction. eBay appealed the permanent injunction to the Supreme Court of the United States, which on May 15, 2006 found an injunction is not required nor automatic in this or any patent case where guilt has been established. The case was sent back to the Virginia district court for consideration of the injunction and a trial on another MercExchange patent.

In August 2004, eBay acquired 25% of the classified advertising website Craigslist for $32 million. Former disgruntled Craigslist executive Phillip Knowlton was the seller.

In December 2004, eBay acquired Rent.com for $415 million.

In March 2005, eBay launched Kijiji, a classified advertising website, in international markets. It launched in the United States in July 2007.

In May 2005, eBay acquired Gumtree, a classified advertising website in the United Kingdom.

In October 2005, eBay Inc. acquired Skype Technologies for $2.6 billion.

In February 2006, Intuit launched a web-based version of ItsDeductible, a donation tracking service, using data from eBay to help users assign a market value to the items they donate.

 

In April 2006, eBay launched eBay Express, a site that was designed to work like a standard Internet shopping site, with fixed prices and no bidding involved. The website had 10 million items listed upon its launch. The site was shut down in October 2008.

In January 2007, eBay acquired StubHub, an online marketplace for ticket resale, for $310 million.

In April 2008, eBay sued Craigslist, claiming that in January 2008, Craigslist took actions that "unfairly diluted eBay's economic interest by more than 10%", making eBay lose its seat on the board of directors of Craigslist. Craigslist countersued in May 2008 alleging that eBay used its board seat to gain insider information about Craigslist that was used to compete against the company. In September 2010, Delaware Judge William B. Chandler III ruled that the actions of Craigslist were unlawful and that the actions were taken by Craigslist founders Jim Buckmaster and Craig Newmark had "breached their fiduciary duty of loyalty", and restored eBay's stake in the company to 28.4% from a diluted level of 24.85%. However, the judge dismissed eBay's objection to a staggered board provision, citing that Craigslist has the right to protect its own trade secrets.

In January 2008, Meg Whitman resigned as president and CEO of eBay to enter politics, and was replaced with John Donahoe. Whitman remained on the board of directors and continued to advise Donahoe through 2008.

In May 2008, eBay announced the opening of a building on the company's North Campus in San Jose, California, the first ground-up structure in the city to be built to LEED Gold standards. The building, the first the company had built in its 13-year existence, uses an array of 3,248 solar panels, spanning 60,000 square feet (5,600 m²), and providing 650 kilowatts of power, 15–18% of the company's total energy requirements, reducing carbon dioxide usage by 37 million pounds over 30 years. The building also has energy-efficient lighting and water system and most waste is recycled.

In April 2009, eBay agreed to acquire a controlling stake in G-Market, a South Korean online retailer, for $413 million.

In May 2009, eBay launched the Selling Manager Applications program (SM Apps). The program allows approved developers to integrate their applications directly into the eBay.com interface.

In November 2009, eBay sold a 70% stake in Skype to a consortium led by Silver Lake Partners and Marc Andreessen at a $2.75 billion valuation, while retaining a 30% minority ownership interest in Skype, after failing to integrate Skype into the company's online marketplace. Microsoft acquired the entire company for $8.5 billion in May 2011.

2010s

In June 2011, eBay acquired GSI Commerce for $2.4 billion. In June 2013, it was renamed eBay Enterprise.

In May 2012, RentPath, then known as Primedia, acquired Rent.com from eBay for approximately $415 million.

In September 2012, eBay introduced a new logo using a thinner variation of the Univers typeface. It replaced the thicker Univers logo that had been used since eBay's inception in 1995.

•  
  1995–2012
•  
  2012–present

In October 2012, eBay launched an international shipping partnership with Pitney Bowes whereby a seller of an item to be shipped internationally can send the item to a Pitney Bowes facility in their home country, which then forwards it to the international buyer, taking care of all international shipping requirements. The company also launched a partnership with FedEx to offer discounted shipping options to sellers.

In November 2012, eBay was charged in the High-Tech Employee Antitrust Litigation, accused by the United States Department of Justice of entering into non-solicitation agreements with other technology companies involving highly skilled employees. The litigation was settled in May 2014, with eBay required to end anti-competitive practices.

On September 30, 2014, eBay announced it would spin off PayPal into a separate publicly traded company, a demand made nine months prior by activist hedge fund magnate Carl Icahn. The spinoff was completed on July 18, 2015. eBay's then chief executive, John Donahoe, stepped down from that role.

In January 2015, eBay acquired Vivanuncios, a classified advertising website in Mexico.

In June 2015, eBay sold its stake in Craigslist back to the company, ending the litigation.

In August 2015, eBay sold a portion of its stake in Snapdeal.

In September 2015, Propay and Skrill were eliminated as payment methods on the eBay website, citing low usage.

Flipkart and eBay entered into a strategic partnership in July 2017 under which eBay acquired a 5.44% stake in Flipkart in exchange for the contribution of its India business unit valued at $211 million and a $514 million cash investment in Flipkart. Flipkart launched a program to allow its sellers to sell to customers globally in partnership with eBay. eBay reported a gain of $167 million on the sale of its India operations. In May 2018, eBay sold its stake in Flipkart to Walmart and relaunched its operations in India.

In August 2017, eBay shut Half.com.

In October 2017, eBay released image retrieval capability allowing users to find listings on the site that match an item depicted in a photo, using artificial intelligence and machine learning technologies.

On January 31, 2018, eBay announced that it would replace PayPal as its primary payments provider with Netherlands-based start-up Adyen, resulting in lower costs and more control of merchants.

In May 2018, eBay acquired the Japanese e-commerce platform Qoo10 for $573 million.

In July 2018, eBay announced support for Apple Pay as well as a partnership with Square for seller financing loans of up to $100,000.

In September 2018, in response to the YouTube headquarters shooting, eBay announced plans to install a security fence around the perimeter of its San Jose headquarters to protect employees.

In March 2019, the company paid its first dividend following investor pressure to improve shareholder return.

On July 31, 2019, the company acquired a 5.59% stake in Paytm Mall.

In September 2019, facing pressure from activist shareholder Elliott Investment Management, Devin Wenig resigned as CEO. Scott Schenkel, senior vice president and chief financial officer since 2015, was appointed as the interim CEO.

In November 2019, eBay agreed to sell StubHub to Viagogo for $4.05 billion in cash; the sale was completed in February 2020.

2020s

In April 2020, Jamie Iannone became the CEO of the company.

In June 2020, Fred D. Anderson and Thomas J. Tierney resigned from the board of directors of the company; both had been directors since 2003.

In July 2020, eBay sold its classifieds business to Adevinta for $2.5 billion in cash and 540 million shares of Adevinta. To gain regulatory approval, Gumtree was further divested. eBay sold its shares in Adevinta in 2023, when that company was acquired by private equity firms.

In September 2020, Pierre Omidyar resigned from the board of directors, after resigning as chairman in 2015.

In November 2021, eBay sold its South Korean business to Emart for $3 billion.

In May 2022, eBay acquired a stake in Funko and became the preferred secondary marketplace for Funko.

In June 2022, the company acquired KnownOrigin, a marketplace for non-fungible tokens.

In August 2022, the company acquired the myFitment group of companies, specializing in online sales of automotive and powersports parts and accessories.

In October 2022, the company acquired TCGPlayer, a marketplace for collectible card games, for up to $295 million.

In July 2023, the company acquired Certiligo, a provider of artificial intelligence-powered digital IDs and authentication for apparel and fashion goods.

In January 2024, the company announced plans to lay off 9% of its workforce after hiring outpaced growth projections.

Financial history

Using MissionFish as an arbiter, eBay allows sellers to donate a portion of their auction proceeds to a charity of the seller's choice and charges discounted fees for charity auctions.

High-profile charity auctions facilitated via eBay include the "Power Lunch" with investor Warren Buffett for 8 people at the Smith & Wollensky restaurant in New York City, with all of the proceeds going to the Glide Foundation. Auctions were held annually in 21 years between 2000 and 2022, with no auctions in 2020 and 2021 due to the COVID-19 pandemic. In total, auctions on eBay for lunch with Buffett raised $53.2 million for the Glide Foundation, with winning bids ranging from $2 million to as high as $19 million for the final auction in 2022. Charity auctions via eBay are planned for lunch with Marc Benioff, CEO of Salesforce.

Also benefitting charity, a letter sent to Mark P. Mays, CEO of Clear Channel Communications by Senator Harry Reid and forty other Democratic senators, complaining about comments made by conservative talk show host Rush Limbaugh, sold for $2,100,100, with all of the proceeds going to the Marine Corps-Law Enforcement Foundation, benefiting the education of children of men and women who have died serving in the armed forces. The winning bid was matched by Limbaugh.

In 2022, more than $163 million was raised for charities via the platform.

Failure to combat fraud

Fraud committed by sellers includes selling counterfeit merchandise / bootleg recordings, shill bidding (undisclosed vendor bidding that is used to artificially inflate the price of a certain item by either the seller under an alternate account or another person in collusion with the seller), receiving payment and not shipping merchandise, shipping items other than those described, giving a deliberately misleading description and/or photo, knowingly and deliberately shipping faulty merchandise, denying warranty exchange after pre-agreeing to return merchandise authorization of defective on arrival merchandise, knowingly fencing (selling stolen goods), misrepresenting the cost of shipping, using bulk shipping prices to knowingly mask much higher costing, individual return shipping, and using pseudo-accounts to make high nonpaying bids on similar items that competitors are selling. eBay has been criticized for not doing enough to combat shill bidding. There are techniques such as auction sniping, which let buyers avoid shill bidders.

Fraud committed by buyers includes filing a false shipping damage claim with the shipping company, friendly fraud (receiving merchandise and claiming otherwise), returning items other than received, removing parts from an item and returning it for a refund, sending a forged payment-service e-mail that states that he or she has made a payment to the seller's account as proof of payment, making a low bid then using pseudo-accounts to make high nonpaying bids in an attempt at gaining a low second chance offer price, damaging a non-refundable item to get a refund by claiming that the seller sent the item already damaged (in cases of buyer's remorse), and a package redirection scam, in which the return package is filled with garbage and sent to the wrong address.

In March 2008, Professional Coin Grading Service issued an alert noting counterfeit PCGS slabs and various United States and Chinese coins originating from the People's Republic of China being sold on eBay.

In 2004, Tiffany & Co. filed a lawsuit against eBay claiming that over 70% of the Tiffany silver jewelry offered for sale on eBay was fake and that eBay profited from the sales of counterfeit Tiffany items that infringed on its trademark. On July 14, 2008, a Federal District Court judge ruled that eBay does not have a legal responsibility to monitor users selling counterfeit items. In 2010, the Second Circuit affirmed this decision in Tiffany (NJ) Inc. v. eBay Inc.

In June 2008, a court in Paris awarded damages of €40 million to LVMH over eBay auctions of counterfeit bags, perfumes, and other items sold by non-authorized retailers and entered a permanent injunction against eBay auctions of LVMH perfumes, whether counterfeit or not. eBay banned such items from its site. Also that month, a court in Troyes, France awarded eBay to pay luxury goods maker Hermès €20,000 due to the sale of two counterfeit bags on eBay in 2006. The court also ordered eBay to post the ruling on the home page of eBay's French website for three months.

Criticism of feedback / rating system

eBay allows buyers to rate any seller with positive, neutral, and negative comments. However, the option for sellers to leave anything other than positive feedback to buyers was removed in 2008.

Criticism of the feedback system includes:

• Small and large transactions carry the same weight in the feedback summary. It is therefore easy for a dishonest user to initially build up a deceptive positive rating by buying or selling low value items, such as e-books, recipes, etc., then subsequently switch to fraud.
• Sellers can attempt to boost their own feedback by buying their own items with alias accounts, and leaving positive feedback for their main selling account.
• Sellers can request feedback be removed and eBay will sometimes do so.
• When eBay removes feedback, the buyer is not informed.

Requirement to use PayPal

In 2007 and 2008, during the period of eBay's ownership of PayPal, eBay required sellers to accept and buyers to pay with PayPal in many instances. This resulted in scrutiny by several regulatory agencies worldwide. The company later changed its payment requirements.

Agreement with Buy.com

In 2008, eBay reached a deal with Buy.com to list millions of items for sale by the retailer, angering sellers who faced additional competition.

2010 survey criticizing eBay customer service

In January 2010, Auctionbytes.com held an open survey in which sellers could rate eBay, as well as competing auction and marketplace sites. In the survey, users were asked to rank 15 sites based on five criteria: profitability, customer service, communication, ease of use, and recommendation. eBay was ranked 13th, after other large sites such as Amazon.com and Craigslist, as well as lesser-known selling sites such as Atomic Mall, eCRATER, and Ruby Lane. In individual category rankings, eBay was rated the worst of all the 15 sites on customer service and communication, and average on ease of use. Some respondents stated they would have given eBay a rating of 10, three to five years ago. eBay was rated twelfth out of fifteen in the Recommended Selling Venue category.

Overcharging fees

In 2011, eBay agreed to pay $30 million to settle a class action lawsuit alleging that it overcharged seller fees for sales of auto parts and accessories between April 2005 and August 2009. Members of the class received a refund of 6.67% of the fees paid in this category.

Low tax rate paid in the United Kingdom

eBay has been criticized for arranging its affairs so as to pay a low level of taxes in the United Kingdom. The Sunday Times reported in October 2012 that eBay paid only £1.2 million in tax on sales of over £800 million in 2010. eBay responded that it "complies fully with all applicable tax laws".

2014 security breach

On May 21, 2014, the company revealed that the consumer database of usernames, passwords, phone numbers, and physical addresses was breached between late February and early March. Users were forced to change their passwords. The Syrian Electronic Army took responsibility for the attack and said that it would not misuse the data; however, in a move of website defacement, replaced the front pages of the websites with their own logo.

Stalking scandal

In June 2020, five employees were terminated and were subject to charges of cyberstalking after they were accused of targeting Ina and David Steiner, the editors and publishers of EcommerceBytes, a newsletter that eBay executives viewed as critical of the company. In addition to sending harassing messages and doxing, the defendants "ordered anonymous and disturbing deliveries to the victims’ home, including a preserved fetal pig, a bloody pig Halloween mask, a funeral wreath, a book on surviving the loss of a spouse, and pornography". The defendants also vandalized the couple's home in Natick, Massachusetts. The conspirators pleaded guilty and most were sentenced to prison terms. Wenig, the company's CEO at the time of the harassment campaign, who was frequently targeted by the newsletter and was described as having paranoia over the criticism, was not charged, instead leaving the company in September 2019 with a $57 million severance package. Steve Wymer, chief communication officer, who had ties with local politicians, was fired "for cause" for alleged involvement but was not charged and was hired by the local chapter of the Boys & Girls Clubs of America.

Sale of controversial items

Items prohibited to be sold on the website include illegal items such as child pornography, counterfeit products; or items that require licenses to sell such as tobacco, alcoholic beverages, firearms and ammunition, certain knives, human body parts, drugs, tarot readings and spells, virtual in-game items; as well as offensive items such as Nazi memorabilia, flags of the Confederate States of America, and used sex toys. Regulations vary by jurisdiction.

Human kidney

In late 1999, a man offered one of his kidneys for auction on eBay, attempting to profit from the potentially lucrative (and, in the United States, illegal) market for organ transplants.

Animals

Two previously undiscovered species, including the Coelopleurus exquisitus sea urchin in 2006, have been listed for sale on eBay.

Nazi memorabilia

In January 2010, eBay withdrew a listing of a Dad's Army board game since the box graphics contained images of swastikas, claiming that it was Nazi paraphernalia and, as such, breached the terms of service. eBay was accused of pandering to political correctness.

Items stolen from the British Museum

Items stolen from the British Museum in 2013 were auctioned on eBay in 2016. The museum reported that several items of jewelry made of gold, semi-precious stones, and glass, dating from between 1,500 BC and the 19th century AD, were among those missing. One piece of ancient Roman jewelry made from onyx – valued between £25,000 and £50,000, or US$32,000 and US$63,000 – was listed on eBay with a minimum price of £40 (US$50) in 2016. There were no bids made for the treasure. The police are investigating this case. The company said that it is supports local police in investigations and removes listings containing stolen property.

Dr. Seuss books

In 2021, the estate of Dr. Seuss requested from eBay, and the company complied, to ban the sale of six Dr. Seuss books due to concerns that some images contained therein were racially insensitive. This led to backlash from followers of right-wing politics and ignited a surge of interest in the discontinued books.

Sale of illegal items

In September 2023, the United States Department of Justice sued eBay, accusing it of violating the Clean Air Act and other environmental laws by allowing the sale of several illegal products, including devices that defeat automobile pollution controls, restricted-use pesticides, and paint and coating removal products containing methylene chloride.

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