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EBay Rob Rochester. eBay Pioneered the popularity of the online auction. Pioneered the popularity of the online auction. Selling everything from antiques.

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Presentation on theme: "EBay Rob Rochester. eBay Pioneered the popularity of the online auction. Pioneered the popularity of the online auction. Selling everything from antiques."— Presentation transcript:

1 eBay Rob Rochester

2 eBay Pioneered the popularity of the online auction. Pioneered the popularity of the online auction. Selling everything from antiques to automobilesSelling everything from antiques to automobiles One of the most important strategic assists eBay had was the information it gained by conducting auctions. One of the most important strategic assists eBay had was the information it gained by conducting auctions. Invaluable information forInvaluable information for the design of auctions the design of auctions identifying service enhancements identifying service enhancements Other business opportunities Other business opportunities Including partnering with other services providers.Including partnering with other services providers.

3 eBay Pierre Omidyar Pierre Omidyar In 1995 Founded AuctionWeb with the idea ofIn 1995 Founded AuctionWeb with the idea of Providing an Internet site where person-to- person trading could take place Providing an Internet site where person-to- person trading could take place Buyers and sellers rushed to the site, and by 1997 AuctionWeb became eBay.Buyers and sellers rushed to the site, and by 1997 AuctionWeb became eBay. Meg Whitman Meg Whitman Brought on to serve as president and CEOBrought on to serve as president and CEO

4 Impressive growth By mid-2000 By mid-2000 eBay hadeBay had 15.8 million registered users who traded items in more then 15.8 million registered users who traded items in more then 4,320 categories 4,320 categories On an average dayOn an average day 4.3 million active auctions 4.3 million active auctions 500,000 new items listed 500,000 new items listed 1.8 million visits with an average of 20 minutes 1.8 million visits with an average of 20 minutes Estimated to Estimated to Host 90% of online auctionsHost 90% of online auctions Control 85% of the marketControl 85% of the market

5 An online auction Involved listing an item for sale with a closing date and time. Involved listing an item for sale with a closing date and time. The sellerThe seller Provided a description of the item Provided a description of the item Most provided picturesMost provided pictures Could specify Could specify a minimum opening bida minimum opening bid A bid incrementA bid increment A reserve priceA reserve price Not disclosed to the bidders Not disclosed to the bidders The transaction between seller and high bidder The transaction between seller and high bidder Executed with out eBay’s involvementExecuted with out eBay’s involvement

6 eBay eBay’s principle asset was its ability to aggregate buyers and sellers on its website. eBay’s principle asset was its ability to aggregate buyers and sellers on its website. Charged a small fee for listing and sales.Charged a small fee for listing and sales. Used high levels of customer service. Used high levels of customer service. Its reputation helped maintain its leadership among online auction sites.Its reputation helped maintain its leadership among online auction sites. “The key to eBay’s success is trust. Trust between the buyers and sellers who make up the eBay community. And trust between users and eBay, the company” “The key to eBay’s success is trust. Trust between the buyers and sellers who make up the eBay community. And trust between users and eBay, the company”

7 Policing eBay eBay relied on its community to help police its site eBay relied on its community to help police its site “the community is also self-policing, and users frequently form ‘neighborhood watch’ groups to help guard against misuse or violations of the sites etiquette.”“the community is also self-policing, and users frequently form ‘neighborhood watch’ groups to help guard against misuse or violations of the sites etiquette.” eBay Sought to ensure the privacy of its users. eBay Sought to ensure the privacy of its users. eBay’s privacy policy was TRUSTe approved.eBay’s privacy policy was TRUSTe approved. eBay was a founding member of the Online Privacy Association.eBay was a founding member of the Online Privacy Association.

8 eBay’s revenue Revenue of millionRevenue of million Net income of 11 millionNet income of 11 million The first half of 2000 The first half of 2000 Doubling of revenue from the previous yearDoubling of revenue from the previous year Net income increased to 17.9 millionNet income increased to 17.9 million Market capitalization reached 30 billionMarket capitalization reached 30 billion Reflecting its leading position in the online auction market and its seemingly unlimited potential. Reflecting its leading position in the online auction market and its seemingly unlimited potential. The end of 2000 The end of 2000 Market capitalization fell to 16 billionMarket capitalization fell to 16 billion Due to Market decline in high tech stocks Due to Market decline in high tech stocks

9 U.S. Supreme court U.S. supreme court decision (Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S.,340) held that “facts”, even if collected through “sweat and effort”, remained in the public domain.U.S. supreme court decision (Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S.,340) held that “facts”, even if collected through “sweat and effort”, remained in the public domain. Earlier court decision had held that databases were protected by copyright under the “sweat of the brow” doctrine. Earlier court decision had held that databases were protected by copyright under the “sweat of the brow” doctrine. In FeistIn Feist The court affirmed the originality and creativity requirements and stated that The court affirmed the originality and creativity requirements and stated that “all facts – scientific, historic, biographical, and news of the day… are part of the public domain available to every person”“all facts – scientific, historic, biographical, and news of the day… are part of the public domain available to every person” An example:An example: The telephone WhitePages can not be copyrighted because they are simply an alphabetical list of names and numbers, whereas the YellowPages can be copyrighted because the information is arranged by category, which has a degree of originality. The telephone WhitePages can not be copyrighted because they are simply an alphabetical list of names and numbers, whereas the YellowPages can be copyrighted because the information is arranged by category, which has a degree of originality. This ruling gave auction aggregators a legal basis for extracting “facts” from eBay and other online auction sites.This ruling gave auction aggregators a legal basis for extracting “facts” from eBay and other online auction sites.

10 Auction aggregators Auction aggregators would Auction aggregators would Search internet auction sitesSearch internet auction sites Extract data Extract data Provided the data to its usersProvided the data to its users Created value by allowing customers to comparison shop. Created value by allowing customers to comparison shop.

11 Bidder’s Edge Bidder’s Edge The first Auction Aggregators appeared in spring of 1999The first Auction Aggregators appeared in spring of 1999 In September eBay declared that the listings on its Internet site were its “property”In September eBay declared that the listings on its Internet site were its “property” Prohibited auction aggregators from searching its site. Prohibited auction aggregators from searching its site. Bidder’s EdgeBidder’s Edge Stopped its searches Stopped its searches Took out a full page ad in the New York Times protesting eBay's move.Took out a full page ad in the New York Times protesting eBay's move. Other Auction AggregatorsOther Auction Aggregators Resumed listing eBay's items on their sites Resumed listing eBay's items on their sites Seeing its self at a competitive disadvantage Bidder’s Edge started again.Seeing its self at a competitive disadvantage Bidder’s Edge started again.

12 eBay attempted to work with auction aggregators eBay attempted to work with auction aggregators Offered a small fee and a bounty for each user directed to eBay’s siteOffered a small fee and a bounty for each user directed to eBay’s site 5 auction aggregators took licenses 5 auction aggregators took licenses Allowing them to query eBay’s system how a user would.Allowing them to query eBay’s system how a user would. Prohibited copying of data. Prohibited copying of data. “this is a clear cut example of one business trying to get a free ride off eBay’s success. What we've been trying to do is reach out to these third parties and establish some appropriate business guidelines.”“this is a clear cut example of one business trying to get a free ride off eBay’s success. What we've been trying to do is reach out to these third parties and establish some appropriate business guidelines.” Auction Rover Auction Rover Agreed to eBay’s conditionsAgreed to eBay’s conditions Had a separate eBay tab on its website. Had a separate eBay tab on its website. “we've taken a more pro-eBay approach. Our competitors have taken a more, if you pardon the vernacular, ‘screw eBay!’ approach.” – Scot Wingo CEO of AuctionRover“we've taken a more pro-eBay approach. Our competitors have taken a more, if you pardon the vernacular, ‘screw eBay!’ approach.” – Scot Wingo CEO of AuctionRover

13 Bidder’s Edge Obtained data from nearly 100 online person-to- person and merchant auction sites. Obtained data from nearly 100 online person-to- person and merchant auction sites. Providing users withProviding users with an overview of available items an overview of available items Comparison information Comparison information Tracking services of items Tracking services of items Bidder’s Edge Bidder’s Edge Items on eBay accounted for 69% of the Bidders Edge database.Items on eBay accounted for 69% of the Bidders Edge database. Used a robotic program that daily copied approximately 80,000 pages Used a robotic program that daily copied approximately 80,000 pages Stored on Bidders Edge’s computers and updated reclusivelyStored on Bidders Edge’s computers and updated reclusively A query by a visitor to Bidder’s Edge’s website was then answered by searching its rather then searching eBay’s database. A query by a visitor to Bidder’s Edge’s website was then answered by searching its rather then searching eBay’s database.

14 Bidders Edge The problem with Bidders Edge The problem with Bidders Edge Bidder’s Edge searched reclusivelyBidder’s Edge searched reclusively The information it provided was: The information it provided was: StaleStale inaccurateinaccurate Bidder’s Edge accounted for about 1.4% of the quarries received by eBayBidder’s Edge accounted for about 1.4% of the quarries received by eBay A heavy load on eBay’s computers A heavy load on eBay’s computers eBay believed that those using Bidder’s Edge and other auction aggregators were not receiving the full experience of its web site and the eBay community. eBay believed that those using Bidder’s Edge and other auction aggregators were not receiving the full experience of its web site and the eBay community.

15 Fighting Robots eBay used a robotic exclusion standard and a robots.xtx file eBay used a robotic exclusion standard and a robots.xtx file Notified those searching its site that robotic searches were prohibitedNotified those searching its site that robotic searches were prohibited Compliance was voluntary Compliance was voluntary Search sites like Google and Yahoo respected the standardSearch sites like Google and Yahoo respected the standard Had a security unit that detected any unusual number of quarries form an IP number and blocked those suspected of violating its policies.Had a security unit that detected any unusual number of quarries form an IP number and blocked those suspected of violating its policies. Bidder’s Edge used proxy servers to avoid eBay's IP blocks. Bidder’s Edge used proxy servers to avoid eBay's IP blocks.

16 Intellectual property Intellectual property law provided protection for information though: Intellectual property law provided protection for information though: patentspatents trademarkstrademarks copyrightingcopyrighting know-how know-how Trade secrets Trade secrets

17 CADP The Coalition Against Database Piracy The Coalition Against Database Piracy Argued that the existing intellectual property laws provided little protection for databases.Argued that the existing intellectual property laws provided little protection for databases. “Copyright law only protects a database to the extent that it is creative in the selection, arrangements, or coordination of the facts it contains. Copyright law does not shield the databases factual content from thievery. Very few databases meet this ‘creative’ requirement because all the things that make a database valuable and user-friendly – its comprehensiveness and its logical order – are deemed to involve no ‘creative’ selection, arrangement or coordination.” “Copyright law only protects a database to the extent that it is creative in the selection, arrangements, or coordination of the facts it contains. Copyright law does not shield the databases factual content from thievery. Very few databases meet this ‘creative’ requirement because all the things that make a database valuable and user-friendly – its comprehensiveness and its logical order – are deemed to involve no ‘creative’ selection, arrangement or coordination.” Also argued that the U.S. Anti Hacking Statute as well as state contract and misappropriation laws provided inadequate protection.Also argued that the U.S. Anti Hacking Statute as well as state contract and misappropriation laws provided inadequate protection. The Antihacking statue has “never been held to apply to a published database at all – no matter what its format. Nor would the statute apply in a situation where a database producer - like eBay – makes information available over the Internet without a password or firewall protecting it.” The Antihacking statue has “never been held to apply to a published database at all – no matter what its format. Nor would the statute apply in a situation where a database producer - like eBay – makes information available over the Internet without a password or firewall protecting it.” State contract law applied only to signed agreements State contract law applied only to signed agreements “Misappropriation is an ill-defined state law doctrine and it does not provide database creators with uniform, nationwide protection. “Misappropriation is an ill-defined state law doctrine and it does not provide database creators with uniform, nationwide protection.

18 eBay’s alternatives Ebay could attempt to establish through the courts intellectual property rights to the data it generated from its auctions. Ebay could attempt to establish through the courts intellectual property rights to the data it generated from its auctions. Allowing eBay to block the Auction aggregators.Allowing eBay to block the Auction aggregators. The Feist decision placed heavy burden on eBay to demonstrate creativity. The Feist decision placed heavy burden on eBay to demonstrate creativity. eBay could also seek a preliminary injunction and ultimately a permanent injunction against Bidders Edge and other auction aggregators. eBay could also seek a preliminary injunction and ultimately a permanent injunction against Bidders Edge and other auction aggregators. eBay recognized that pursuing a court resolution would be both costly and time consumingeBay recognized that pursuing a court resolution would be both costly and time consuming Decisions could be appealed. Decisions could be appealed. Internet law guidelines were not set in stone. Internet law guidelines were not set in stone. eBay could also use technology to stop the auction aggregators attempts to extract info form its database. eBay could also use technology to stop the auction aggregators attempts to extract info form its database. The problemThe problem A tech fix in the form of a firewall could make the site less convenient for users. A tech fix in the form of a firewall could make the site less convenient for users. It could also lead to a costly technology race. It could also lead to a costly technology race.

19 NetCoalition.com July 1999 July 1999 eBay and eight other Internet Service Providers formed NetCoalition.comeBay and eight other Internet Service Providers formed NetCoalition.com With the mission to be With the mission to be “the collective public policy voice of the world’s leading Internet companies, NetCoalition.com is committed to building user confidence in the internet through responsible market-driven policies; preserving the open and competitive environment that has allowed the internet to flourish; and ensuring the continued vitality of the Internet through active dialogue with policymakers.” Meg Whitman explained, “We want to be active participants in the dialogue that is addressing the critical issues facing the burgeoning Internet industry. As a group we can be a valuable resource and a powerful educational tool for policymakers and the public.”“the collective public policy voice of the world’s leading Internet companies, NetCoalition.com is committed to building user confidence in the internet through responsible market-driven policies; preserving the open and competitive environment that has allowed the internet to flourish; and ensuring the continued vitality of the Internet through active dialogue with policymakers.” Meg Whitman explained, “We want to be active participants in the dialogue that is addressing the critical issues facing the burgeoning Internet industry. As a group we can be a valuable resource and a powerful educational tool for policymakers and the public.”

20 H.R. 354 Reintroduced the “Collections of Information Antipiracy Act” Reintroduced the “Collections of Information Antipiracy Act” The bill has been redrafted to address concerns with the earlier versionsThe bill has been redrafted to address concerns with the earlier versions The judiciary committee reportedThe judiciary committee reported The bill would provide substantial protection to those who collected information, including those who did so on the Internet. Facts were not protected and remained in the public domain. The bill would provide substantial protection to those who collected information, including those who did so on the Internet. Facts were not protected and remained in the public domain. Effect of the bill was to overturn feist.Effect of the bill was to overturn feist. Support came from Support came from eBayeBay Reed ElsevierReed Elsevier ThomsonThomson The American Medical AssociationThe American Medical Association The New York Stock ExchangeThe New York Stock Exchange National Association of RealtorsNational Association of Realtors

21 H.R. 354 supporters Online auction companies, Internet service providers, and publishers were not the only ones concerned about their databases. Online auction companies, Internet service providers, and publishers were not the only ones concerned about their databases. One of the largest most valuable databases was the multiple listings service of real estate properties.One of the largest most valuable databases was the multiple listings service of real estate properties. Companies providing print databases also sought protection.Companies providing print databases also sought protection. The Coalition Against Database Piracy The Coalition Against Database Piracy Formed to support H.R. 354 and against H.R. 1858Formed to support H.R. 354 and against H.R The CADP argued that The CADP argued that H.R. 354 was pro-internet and pro-consumer.H.R. 354 was pro-internet and pro-consumer. Created to provide information on the issue. Created to provide information on the issue.www.gooddata.org “ H.R only bars thefts that results in duplicate databases. This allowed ‘free riders’ to avoid liability by the simply contrivance of cutting and pasting the stolen data so that the ‘new database’ is not a ’duplicate’ of the original – a simple task today for anyone with a computer.“ H.R only bars thefts that results in duplicate databases. This allowed ‘free riders’ to avoid liability by the simply contrivance of cutting and pasting the stolen data so that the ‘new database’ is not a ’duplicate’ of the original – a simple task today for anyone with a computer.

22 “This data confirms what we have known all along – the American people share the view that database piracy is a serious problem and that there is an urgent need to enact anti- piracy legislation in congress…consumer access to accurate information is being compromised when anyone can copy and steal a privately owned database with no fear of penalty. Without protection, databases are in jeopardy and consumers will lose access to trusted information.” – Gail Littlejohn and Reed Elsevier“This data confirms what we have known all along – the American people share the view that database piracy is a serious problem and that there is an urgent need to enact anti- piracy legislation in congress…consumer access to accurate information is being compromised when anyone can copy and steal a privately owned database with no fear of penalty. Without protection, databases are in jeopardy and consumers will lose access to trusted information.” – Gail Littlejohn and Reed Elsevier

23 H.R “consumer and investor access to information act of 1999” “consumer and investor access to information act of 1999” Focused on the value of information to consumers and the benefits to Internet users from being able to obtain comparisons of information from different databases.Focused on the value of information to consumers and the benefits to Internet users from being able to obtain comparisons of information from different databases. The bill would proscribe “the sale or distribution to the public of any database that (1) is a duplicated of another database collected and organized by another person or entity; and (2) is sold or distributed in commerce in competition with the other database.” The bill would proscribe “the sale or distribution to the public of any database that (1) is a duplicated of another database collected and organized by another person or entity; and (2) is sold or distributed in commerce in competition with the other database.” Enforcement responsibility would be assigned to the Federal Trade CommissionEnforcement responsibility would be assigned to the Federal Trade Commission

24 H.R supporters Argued that H.R. 354 would give too much protection to databases, effectively creating data monopolies. Argued that H.R. 354 would give too much protection to databases, effectively creating data monopolies. “the bill would mean they would have absolute ownership right over something as basic as stock quotes.” a spokes person for the Chamber of Commerce said, “factual data is the nuts and bolts of the information age. If you try to control its use, your going to stifle commerce.”“the bill would mean they would have absolute ownership right over something as basic as stock quotes.” a spokes person for the Chamber of Commerce said, “factual data is the nuts and bolts of the information age. If you try to control its use, your going to stifle commerce.” Companies backing H.R Companies backing H.R Yahoo!Yahoo! AOLAOL Research librariansResearch librarians Telecommunications companiesTelecommunications companies The U.S. Chamber of CommerceThe U.S. Chamber of Commerce Consumers UnionConsumers Union Charles SchwabCharles Schwab BloombergBloomberg

25 NetCoalition.com NetCoalition.com believed NetCoalition.com believed “as congress considers the database issue, it must balance the objective of preventing database piracy with the equally important objective of preserving legitimate access to information, that does not conflict with the principles in feist. Accordingly, additional database protection should be narrowly crafted to address specific, defined problems. NetCoalition.com believes that H.R meets this test and, against the background of the many existing forms of protection, achieves the necessary balance between protection and access.” “as congress considers the database issue, it must balance the objective of preventing database piracy with the equally important objective of preserving legitimate access to information, that does not conflict with the principles in feist. Accordingly, additional database protection should be narrowly crafted to address specific, defined problems. NetCoalition.com believes that H.R meets this test and, against the background of the many existing forms of protection, achieves the necessary balance between protection and access.” “The Internet is in fact a network of databases, and information is made accessible through tables of routers and a standardized system of IP addressing that enables the Internet to work. If the original compilers of those ‘databases’ exerted monopoly control over, or prohibited, downstream users of the information complied in those databases, the future operation of the Internet would be threatened.” – Frank Politano of AT&T “The Internet is in fact a network of databases, and information is made accessible through tables of routers and a standardized system of IP addressing that enables the Internet to work. If the original compilers of those ‘databases’ exerted monopoly control over, or prohibited, downstream users of the information complied in those databases, the future operation of the Internet would be threatened.” – Frank Politano of AT&T

26 Challenges eBay eBay Its database and the community it had developed were important strategic assets for eBay.Its database and the community it had developed were important strategic assets for eBay. Its biggest challenge ahead would be to protect those assets while allowing information to flow freely on the internet. Its biggest challenge ahead would be to protect those assets while allowing information to flow freely on the internet. Bidder’s Edge and other Auction Aggregators. Bidder’s Edge and other Auction Aggregators. Needed legalisations to fall on their side to allow for their businesses to continue.Needed legalisations to fall on their side to allow for their businesses to continue. “we’re no different from any other search engine. Yahoo! And Lycos gather lots of information every day from sites without exclusive permission. If eBay is right and the courts agree, that would rip the guts out of the Web itself.” “we’re no different from any other search engine. Yahoo! And Lycos gather lots of information every day from sites without exclusive permission. If eBay is right and the courts agree, that would rip the guts out of the Web itself.”


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