One Year Ago: U.S. Justice Department Launches eBay Anti-Competition Probe

Originally published on February 4, 2000 and brought to you today as a time capsule.

The U.S. Justice Department is reportedly investigating online auctioneer eBay, Inc. to determine whether its efforts to block price comparison search software from probing its Web site are anti-competitive.

Since the investigation by the department’s antitrust division is in a preliminary stage, there is no indication that formal action against eBay will be taken. A team of investigators has already met with Bidder’s Edge, Inc. and AuctionWatch.com, two of the smaller auction sites that have been barred from eBay’s site.

Controversy Over Bots

The dispute is focused on the growing use of “shopping bots,” which are used to comb various Web sites for the lowest price on a product or auction item.

As reported in the E-Commerce Times in October, eBay told AuctionWatch.com that it was no longer permitted to search its site after both sides failed to come to terms on a licensing agreement. Since then, however, such similar services as AuctionRover.com have opted to sign a licensing agreement with the Palo Alto, California-based eBay.

Meanwhile, eBay has also barred BiddersEdge.com and RubyLane.com from searching the nearly three million auction items on its site.

eBay filed a lawsuit against BiddersEdge.com in December, alleging that its software had trespassed on eBay’s computers and had also committed computer fraud and misappropriation.

“The specific issue is about eBay, but the broad issue here is how open is the Web,” Bidder’s Edge CEO James Carney told the E-Commerce Times. “This is an instance of someone using their power to take advantage. People only have so much time and the Internet needs services like ours. If Yahoo! had been restricted, the Internet wouldn’t be the same. We argue that the same is true for us and the online auction business.”

Carney said that eBay is the only auction site to object to having their listings searched. Others, which include Yahoo!, Amazon and some 150 other auction sites, are grateful for the exposure, he said.

eBay’s Side

According to some analysts, companies that refuse to pay eBay a licensing fee for the right to search its site are little more than parasites.

Additionally, eBay — which has had its fair share of crashes — has pointed out that the millions of queries generated by multiple search engines could have the potential to slow down its site.

Nonetheless, the opposing auction sites contend that being cut off from eBay is tantamount to being cut off from 90 percent of the auction action — and that no one should be forced to pay for access to information on a Web site that is open to the public.

Ignoring eBay Order

AuctionWatch announced last month that it had developed “proprietary technology” to reintegrate eBay auction listings on its site. The company said it had been circumventing eBay’s efforts to block its access by employing a temporary solution that listed the results in a separate browser window.

“This is not simply about AuctionWatch.com and eBay,” said AuctionWatch CEO Rodrigo Sales. “It strikes to the heart of a much bigger issue. The foundation of the Internet lies in freedom of information. eBay’s actions are not only contrary to the best interests of consumers, but have the potential to set a dangerous precedent that could threaten the evolution and growth of the Web.”

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