Australia May Block eBay's Mandate To Use PayPal - InformationWeek
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6/16/2008
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Australia May Block eBay's Mandate To Use PayPal

The Australian Competition and Consumer Commission suggested that it would likely block eBay's effort to require all Australian trades to use PayPal for payments.

During a week that eBay wants to celebrate with its best customers at its annual eBay Live event in Chicago, the online auction company finds itself preoccupied with challenges in two of its chief units -- online payments company PayPal and voice-over-IP provider Skype.

The PayPal electronic payment platform was thrown a curve ball by the Australian Competition and Consumer Commission, which suggested in informal comments that it would likely block eBay's effort to require all Australian trades to use PayPal for payments.

The ACCC signaled that it looks upon an exclusive PayPal arrangement as anti-competitive, although it will receive comments on the issue until July 3. The move by eBay to mandate PayPal usage in Australia was interpreted by some sellers as a first step in a plan that will spread to other markets.

Reaction from Australian sellers was swift. "The longer this debate continues the worse it is for sellers, and the more it drags on the worse it's eventually going to be for eBay and its shareholders," said Australian sellers representative Phil Leahy, according to Australian media reports Monday. "The overwhelming response from sellers is for this to end now and for consumer choice to prevail."

Leahy, who is president of the Professional eBay Sellers Alliance, said eBay had raised security issues with the PayPal measure and that had given buyers "the idea that [the] Web site has some serious issues with security and trust."

EBay has argued that an exclusive use of its PayPal platform would help reduce disputes between buyers and sellers on the auction site.

As for its Skype unit, the VoIP calling operation enjoys wholehearted support from eBay chief executive John Donahoe, according to Skype's chief executive, Josh Silverman. EBay has acknowledged that it overpaid for Skype -- it took a $1.4 billion write-down on Skype last year -- and ever since then the auction company has been dogged by rumors Skype would be sold off.

Skype is profitable and has continued to grow, but it hasn't proven to be of much help for eBay's online auction business. "It's one of the fastest growing companies in human history," said Silverman early this week.

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