Out of Control

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July 07, 2006

No Payment Neutrality from eBay

The blogosphere is abuzz today with eBay’s decision to ban Google Checkout, a third-party funds transfer system Google launched last week to be competitive with eBay’s popular PayPal service.

Isn’t the business model that favors an affiliated online service over that of a competitor the very thing companies like eBay say they want to “safeguard” consumers from through network neutrality? Once again, what’s good for the goose is not good for the gander.

Also interesting has been the immediate negative reaction from the user community. Despite its appeal as an example of an Internet success, down in the trenches of Internet commerce, eBay has not been winning many friends lately (unless you count MoveOn.org, a hook-up which it may yet come to rue).

EBay collects a whopping 5.25 percent vig on products sold through its site , up from less than 2 percent not so long ago. Add to that insertion fees, reserve fees and final value fees, not to mention the transaction fee its PayPal unit collects on every transaction, and you see why eBay’s relationship with many merchants (especially small ones) has soured. The Google Checkout ban, which will be most strongly felt by these same merchants, won’t help. Already some (regrettably) are calling for antitrust suits.

Which brings us around to another argument we’ve been making about network neutrality—the competitive market itself is a check on attempts to abuse market power. Consumers used to a lot of Internet freedom resent constraints. It remains to be seen whether eBay will get away with this. It’s not the monopoly some outraged users think it is. Google, Yahoo and Amazon are chomping at the bit to get a share of eBay’s action. This may be a boost they need. For eBay, at best, it remains an experiment. By the early reaction, it looks like it may fail.

More postings on the move can be found at these links.

http://arstechnica.com/news.ars/post/20060706-7203.html

http://ebaystrategies.blogs.com/ebay_strategies/2006/07/ebay_bans_googl.html

http://www.searchenginejournal.com/?p=3607

http://blog.pff.org/archives/2006/07/ebaygoogle_batt.html

Posted by steve.titch at July 7, 2006 02:42 PM

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