E Ebay Sues Amazon Claiming Illegal And Unethical Activity

It's no secret that Amazon's (AMZN) growth has far outpaced eBay's (EBAY). But now eBay claims the online giant got there by crossing a legal line: by infiltrating eBay and misappropriating its internal messaging system (known as M2M) to poach it's sellers.

To circumvent eBay's safeguards, the company alleges that Amazon representatives took extra measures such as spelling out email addresses and convincing eBay users to contact them over the phone. eBay described it as an "orchestrated, coordinated, worldwide campaign" to "illegally lure eBay sellers to sell on Amazon". eBay says the Amazon "scheme" violated its user agreement policies and "induced eBay sellers to do the same."

"Amazon's misuse of eBay's M2M system has been coordinated, targeted, and designed to inflict harm on eBay," the complaint reads. "Indeed, one of the Amazon sales representatives who participated in this scheme described the team he worked on as a 'hunter/recruiter team which actively searches for sellers we believe can do well on the [Amazon] platform.'"

eBay claims that Amazon's illegal activity has been going for years but that the company only uncovered these efforts recently when notified by one of it's sellers. eBay investigated the sellers claim and found them to be true. eBay made it's complaint public earlier this month and sent Amazon a cease-and-desist letter. Amazon has declined to comment on the lawsuit and responded only to say that it would initiate an internal investigation to look into the matter.

While neither company discloses the number of sellers on their platforms, eBay, which was founded only one year after Amazon, is significantly smaller: Last quarter, Amazon's net revenue totaled $52.9 billion. eBay's revenues were paltry by comparison at only $2.6 billion. In fact, 3rd party sales now account for over half the products sold on Amazon's site.  But is that growth due to the illegal activity that eBay alleges?  It's now up for the courts to decide.  Regardless, will shoppers or investors even care?

Disclosure: None.

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Comments

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William K. 1 month ago Member's comment

Interesting. I have no use for Ebay and it's very high commissions, and it's very obnoxious intrusions into my information searches. And I see no reason at all to complain about $2.6 billion revenue. Much less taxes on that amount.

Trinity Sinclair 1 month ago Member's comment

I definitely noticed Ebay products gradually move into amazon and prices in Ebay rose up to match Amazon levels over the years.

Ayelet Wolf 1 month ago Member's comment

Unethical... sure. But illegal? How is it illegal that #Amazon exploited some weaknesses in the #eBay system? Violating a website's terms of use is grounds for being suspended or kicked off that site, but you can't go to jail for it. How can eBay claim this is illegal behavior? $AMZN $EBAY

Jason Green 1 month ago Member's comment

I was wondering the same. eBay is quoted as saying that Amazon tried to "illegally lure eBay sellers to sell on Amazon." That doesn't rise to the level of breaking the law. Does it?

Craig Newman 1 month ago Member's comment

Honestly... As long as I can get my products at the cheapest price possible, who cares? This competition is good for the end customer. Companies playing dirty to get ahead? There's nothing new there.

Gil Richards 1 month ago Member's comment

There is some truth to what Craig says. Companies always need to be wary of the competition. #eBay should either have had better safeguards in place, or even better, had they had better terms for their sellers, #Amazon would never have been able to steal them in the first place.

Danny Straus 1 month ago Member's comment

This doesn't surprise me in the least. Remember when #Uber tried to kill #Lyft by having a team constantly order and then cancel cars to annoy its drivers and passengers (when no cars would be available). Unfortunately, just because a big company is involved, doesn't mean ethical practices are. In fact I'd suspect that most companies GOT big by cheating. Just watch the tv show #Billions.

Bill Johnson 1 month ago Member's comment

Good point. And that was far from #Uber's only crime. They are probably one of the most unethical companies around. Yet they still make a bundle. Same with #Amazon. Even if they lose in court, it will likely amount to a minor slap on the wrist - a tiny percentage of the profits they reaped from this activity.

As long as the punishments are insignificant, the crimes will continue as the reward far outweighs the risk. I hope #eBay wins.

Michele Grant 1 month ago Member's comment

Yes, Uber is far worse than even Amazon.

George Lipton 1 month ago Member's comment

True. As much as I like #Amazon, they aren't exactly known as a "kind" company. They literally work their employees to death. Just google "Amazon warehouse workers" and you'll see countless sob stories of mistreatment.

Harry Goldstein 1 month ago Member's comment

This is nothing new. Look at Bayer $BAYN and all the other German companies that got huge by using slave Jewish labor during the Holocaust. Even $IBM profited from the Nazi's by helping them to be more efficient when killing Jews.

All companies really care about is their bottom line. In 99% of instances, any company being "kind" has only done so after doing an analysis and seeing that the positive PR benefits outweigh the costs.