eBay Modifies Privacy Policy with Toysmart in Mind

eBay (Nasdaq: EBAY) has revised its privacy policy, clearing the way for user information to be transferred to a third party if the auction leader is sold or merged.

eBay notified users of the changes to its privacy policy over the weekend as part of several updates to its user agreement.

"In general, our main privacy position has not changed," eBay told users. "We do not want your mailbox filled with spam from other Web sites and therefore we do everything within our reasonable ability to protect your information."

Toysmart Fallout

However, eBay now says that in the event that the entire company or a subsidiary is sold or merged, the new entity would gain access to the database of customer information.

eBay said that users would then be notified and given the option of canceling their memberships if that were to occur.

The policy change specifically references the outcry and legal wrangling over the account information of failed toy e-tailer Toysmart.com. In an odyssey that stretched out almost eight months, Toysmart tried to sell its customer information database as an asset, but was blocked by lawsuits from state attorneys general and the U.S. Federal Trade Commission.

In January, a deal was reached to have a subsidiary of The Walt Disney Co., an original backer of Toysmart, purchase the information for US$50,000 and destroy it.

No Outcry

In adjusting its policy to take Toysmart into account, eBay follows the lead of other e-tailers, including Amazon.com.

The main difference between the eBay and Amazon policy changes so far seems to be the reaction from privacy watchdog groups. When Amazon changed its policy its policy, several groups came forward to condemn the e-tailer. So far, however, reaction to eBay's changes have been muted.

Even eBay users, who are notorious for venting on auction message boards, seem to be taking the news in stride, choosing to focus instead on eBay's temporary inability to make the change to daylight-saving time on April 1st.

Not an Auctioneer

In fact, most of the messages generated by the policy change focused on speculation of who might acquire eBay to trigger the takeover clause. Media giants such as America Online and Disney were the most rumored suitors.

Another principal change to the eBay user agreement, meanwhile, is a clarification of eBay's status as a "a platform for buying and selling goods" rather than a traditional auctioneer. That statement is apparently aimed at protecting eBay against lawsuits.

The new policies take effect in mid-May.