Transcript eBay (1)
eBay Rob Rochester eBay Pioneered the popularity of the online auction. • Selling everything from antiques to automobiles One of the most important strategic assists eBay had was the information it gained by conducting auctions. • Invaluable information for the design of auctions identifying service enhancements Other business opportunities • Including partnering with other services providers. eBay Pierre Omidyar • In 1995 Founded AuctionWeb with the idea of Providing an Internet site where person-toperson trading could take place • Buyers and sellers rushed to the site, and by 1997 AuctionWeb became eBay. Meg Whitman • Brought on to serve as president and CEO Impressive growth By mid-2000 • eBay had 15.8 million registered users who traded items in more then 4,320 categories • On an average day 4.3 million active auctions 500,000 new items listed 1.8 million visits with an average of 20 minutes Estimated to • Host 90% of online auctions • Control 85% of the market An online auction Involved listing an item for sale with a closing date and time. • The seller Provided a description of the item • Most provided pictures Could specify • a minimum opening bid • A bid increment • A reserve price Not disclosed to the bidders The transaction between seller and high bidder • Executed with out eBay’s involvement eBay eBay’s principle asset was its ability to aggregate buyers and sellers on its website. • Charged a small fee for listing and sales. Used high levels of customer service. • 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” Policing eBay 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.” eBay Sought to ensure the privacy of its users. • eBay’s privacy policy was TRUSTe approved. • eBay was a founding member of the Online Privacy Association. eBay’s revenue 1999 • Revenue of 224.7 million • Net income of 11 million The first half of 2000 • Doubling of revenue from the previous year • Net income increased to 17.9 million • Market capitalization reached 30 billion Reflecting its leading position in the online auction market and its seemingly unlimited potential. The end of 2000 • Market capitalization fell to 16 billion Due to Market decline in high tech stocks U.S. Supreme court 1991 • 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. • In Feist 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” • 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. • This ruling gave auction aggregators a legal basis for extracting “facts” from eBay and other online auction sites. Auction aggregators Auction aggregators would • Search internet auction sites Extract data • Provided the data to its users Created value by allowing customers to comparison shop. Bidder’s Edge • The first Auction Aggregators appeared in spring of 1999 • In September eBay declared that the listings on its Internet site were its “property” Prohibited auction aggregators from searching its site. • Bidder’s Edge Stopped its searches • Took out a full page ad in the New York Times protesting eBay's move. • Other Auction Aggregators Resumed listing eBay's items on their sites • Seeing its self at a competitive disadvantage Bidder’s Edge started again. eBay attempted to work with auction aggregators • Offered a small fee and a bounty for each user directed to eBay’s site 5 auction aggregators took licenses • Allowing them to query eBay’s system how a user would. 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.” Auction Rover • Agreed to eBay’s conditions 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 Bidder’s Edge Obtained data from nearly 100 online person-toperson and merchant auction sites. • Providing users with an overview of available items Comparison information Tracking services of items Bidder’s Edge • Items on eBay accounted for 69% of the Bidders Edge database. Used a robotic program that daily copied approximately 80,000 pages • Stored 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. Bidders Edge The problem with Bidders Edge • Bidder’s Edge searched reclusively The information it provided was: • Stale • inaccurate • Bidder’s Edge accounted for about 1.4% of the quarries received by eBay 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. Fighting Robots eBay used a robotic exclusion standard and a robots.xtx file • Notified those searching its site that robotic searches were prohibited Compliance was voluntary • Search 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. Bidder’s Edge used proxy servers to avoid eBay's IP blocks. Intellectual property Intellectual property law provided protection for information though: • patents • trademarks • copyrighting know-how Trade secrets CADP The Coalition Against Database Piracy • 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.” • 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.” 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. eBay’s alternatives 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. 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 recognized that pursuing a court resolution would be both costly and time consuming Decisions could be appealed. 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. • The problem 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. NetCoalition.com July 1999 • eBay and eight other Internet Service Providers formed NetCoalition.com 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.” H.R. 354 Reintroduced the “Collections of Information Antipiracy Act” • The bill has been redrafted to address concerns with the earlier versions • The 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. • Effect of the bill was to overturn feist. Support came from • • • • • eBay Reed Elsevier Thomson The American Medical Association The New York Stock Exchange H.R. 354 supporters 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. • Companies providing print databases also sought protection. The Coalition Against Database Piracy • Formed to support H.R. 354 and against H.R. 1858 The CADP argued that • H.R. 354 was pro-internet and pro-consumer. Created www.gooddata.org to provide information on the issue. • “H.R. 1858 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. • “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 antipiracy 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 H.R. 1858 “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. 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 Commission H.R. 1858 supporters 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.” Companies backing H.R. 1858 • • • • • • Yahoo! AOL Research librarians Telecommunications companies The U.S. Chamber of Commerce Consumers Union NetCoalition.com 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. 1858 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 Challenges 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. Bidder’s Edge and other Auction Aggregators. • 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