EBay Drops Passport in Blow to Microsoft

In a crushing blow to Microsoft’s bid to establish its Passport service as a standard for access across the Web, auction giant eBay has said it will drop support for the service, as well as a second Microsoft-built service that provides updates and alerts through the .NET platform.

EBay announced the change on its user message board yesterday and said it will take place in “late January.”

EBay did not give a reason for the moves, but said it would replace the Passport sign-in feature with its own login controls and help features. It is also urging users who rely on the .NET alerts — which can inform a would-be buyer of the current status of auctions they are watching by sending notices to their desktops or wireless devices — to sign up for eBay’s own Alert program.

Passport Marketing

An eBay spokesman was not available to comment on the decision or the reason behind it.

The loss of eBay is significant because it is one of the world’s largest pure e-commerce companies, with US$2.17 billion in sales in 2003 and millions of registered users around the globe.

Previously, job site giant quietly dropped Passport support after three years, leaving mainly Microsoft-controlled sites that use the service. A Microsoft spokesman was not immediately able to answer questions about the future of Passport, but reports published today suggested Microsoft is weighing whether to discontinue marketing the service as a result of the latest changes.

Demand Driven

Passport was seen as a way for Microsoft, which came relatively late to the e-commerce space, to have a hand at the center of much of online sales.

However, it was almost immediately a target of consumer privacy advocates and security experts, some of whom thought it risky and unwise to store the personal information of millions of Web users in a single location. In addition to storing user names and passwords, the Passport service gave users the option of storing credit card numbers.

The Federal Trade Commission (FTC) was also critical of Passport, and Microsoft agreed to make changes in order to settle charges that the service was misrepresented to users.

Gartner analyst John Pescatore said Microsoft’s efforts to enable Web users to sign in across the Internet with its technology was met with resistance from the start, in part because of missteps early on that left Passport vulnerable to hacker attacks and made its ability to collect and store personal data a public relations fiasco.

Ahead of Times

“Consumers and corporations — neither took to the single sign-on the way Microsoft had hoped they would,” he said.

Microsoft might have simply been ahead of the times with Passport, as most analysts expect some form of so-called federated identity or single sign-on to become standard online eventually. Federated systems would work with a single sign-on giving access to multiple sites, but with the log-in information controlled by the sites that the user is attempting to access.

Microsoft is now working, as are others, on more open approaches that are likely to gain more favor with companies. “The reluctance seemed at least in part to be to a proprietary approach,” Pescatore said.

Moving On Up

Speculation was that eBay decided the amount of technical support it had to provide to keep the Passport and .NET features active was no longer worth it, likely because relatively few of its users were taking advantage of it.

Many analysts believe Passport will live on, at least as a tool for gaining access to various Microsoft sites — the MSN portal, Hotmail Web mail and others. It’s likely to be present in the Longhorn version of Windows when it becomes available in the next two years.

Meanwhile, consumers will likely warm to the idea of a single sign-on.

Studies have shown many Web users already have similar logins and passwords at various sites — something security experts discourage — and the convenience of single sign-on will carry the day if security concerns are addressed up front.

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