eBay

▪ online auction company

 global online auction and trading company launched by American entrepreneur Pierre Omidyar in 1995. eBay was one of the first companies to create and market an Internet Web site to match buyers and sellers of goods and services. The company, which caters to individual sellers and small businesses, is a market leader in e-commerce worldwide. eBay is headquartered in San Jose, Calif.

      Customers can participate in Web sites set up within their own country or use one of the company's international sites. There are eBay Web sites for both the U.S. and Canadian markets, most European countries, and several countries in Asia. Latin American Web sites are operated in association with Mercado Libre, an e-commerce provider running similar operations. Although auctions constitute the bulk of eBay sales, fixed-price sales also constitute a significant share of transactions.

      A key factor in eBay's growth was its implementation of procedures to promote safe, transparent trading, accessible nearly anywhere to anyone. PayPal, the online automated clearinghouse for payments, has been a cornerstone of eBay's transaction environment. eBay bought PayPal in October 2002. Other major acquisitions have included Skype, Shopping.com, Rent.com, StubHub, and Craigslist.

      eBay relies on its users to self-regulate the trading community through a feedback system that allows buyers to rate sellers on transactions. (Formerly, sellers also could leave negative feedback on their buyers, but this feature was removed in 2008.) In theory, unscrupulous vendors are exposed and lose the trust enjoyed by reputable sellers. In practice, some vendors receive poor ratings through no fault of their own, such as problems with package deliveries, and other vendors have garnered good ratings for a short period before setting up cybercrime scams to defraud customers. In response, the company made available educational resources for best-practice trading. Furthermore, eBay lists categories of potentially prohibited items; the company sanctions would-be traffickers in goods that may be illegal or offensive. Nevertheless, eBay has come under increasing legal pressure in Europe, where several manufacturers have sued the company, charging that it is complicit in the distribution of counterfeit goods because it takes a commission on the sales that it facilitates without imposing adequate controls on the transactions. In particular, some luxury fashion houses in France have sued eBay for damages, with the first judgment of €20,000 against the company in June 2008.

      By 2008 eBay had about 275 million registered users, and its volume of sales per year was some $60 billion. Since its founding, eBay has channeled a portion of its profits back into local community causes around the world through its charity fund, the eBay Foundation.

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