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Sunday, March 2, 2008

How Google and eBay Act Like Nations

Silicon Insider: How Google and eBay Act Like Nations
These Companies Have Such Immense Power That They Now Take on Governmental Roles.
Great truths can sometimes be found in unlikely juxtapositions.

For example, take two very different news stories that came out of Silicon Valley this week. One is of considerable public interest, the other: one of those infrastructure announcements that most readers typically ignore. But together, they have interesting things to say about the changing role of companies vis a vis their customers, the public and the government.
The first — and more-reported story — was the eight-day boycott against eBay organized by some of the company's own "power sellers." The boycott, which began on Feb. 18, was in protest of fee increases and rule changes that eBay announced in January.

On Wednesday of this week, eBay spokesman Usher Lieberman proudly announced that based upon traffic numbers, "We definitely, numerically, didn't feel an impact from the strike" — then he added, as an apparent sop to the boycotters, "but we certainly heard from our sellers and are listening to them."

But apparently listening was the only thing eBay was doing: Lieberman closed by saying that the company had no plans to abandon any of its new price/rule changes.

On paper, at least, the eBay boycott appears to have failed — at least in the numbers that the company was willing to release. The company said that it only releases traffic data in quarterly SEC filings for its shareholders. eBay would only say that there had been no appreciable change. Meanwhile,, an independent service that tracks eBay, said that the company's listings on Monday, about 10.5 million, was roughly equal to that of a month and a year before.

eBay's at War
But those placid figures hide a much more complicated story. On Feb. 13, less than a week before the boycott was to begin, eBay announced a special two-part promotion that both cut listings to just 20 cents each (down from as much as $5) and modified the pricing plan for sellers of such high-volume items as DVDs and books.

In other words, eBay took the extraordinary step of going to war against its own — depending upon how you characterize them — customers/partners/employees. That raises unanswered questions of whether Monday's traffic numbers actually meant that the boycott had no effect, or whether any damage it did do to the company was camouflaged by the residual effects of the big promotion. Nor did eBay release revenue numbers during the boycott, which were likely heavily affected by the replacement of boycotting high-ticket items with low-priced junk.

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