eBay sues Amazon, accusing it of poaching sellers

As Amazon continues its rise as the world's largest online marketplace, rival eBay charges that it got there...

Posted: Oct 18, 2018 12:19 PM
Updated: Oct 18, 2018 12:19 PM

As Amazon continues its rise as the world's largest online marketplace, rival eBay charges that it got there by crossing a legal line.

eBay filed a lawsuit against Amazon in Santa Clara County on Wednesday alleging it fraudulently poached its high-value sellers by infiltrating an internal messaging system called M2M, In the filing, Ebay says its rival is "unwilling to fairly compete for third party seller business."

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Amazon declined to comment on the lawsuit.

eBay says the Amazon "scheme" violated its user agreement policies and "induced eBay sellers to do the same."

"Amazon's misuse of eBay's M2M system has been coordinated, targeted, and designed to inflict harm on eBay," the complaint reads. "Indeed, one of the Amazon sales representatives who participated in this scheme described the team he worked on as a 'hunter/recruiter team which actively searches for sellers we believe can do well on the [Amazon] platform.'"

eBay monitors the messaging system for unauthorized use and said that messages sent by a "large number" of Amazon representatives indicated that they were attempting to avoid detection.

Although the campaign had been underway for years, eBay said it only found out about Amazon's activities a few weeks ago when an eBay seller notified company representatives. At that time, eBay sent Amazon a cease-and-desist letter.

Both companies have declined to disclose the total number of sellers who transact on their platforms. But eBay, which was founded one year after Amazon and battled the company for dominance in the early years of e-commerce, is now smaller by far. Its net revenues were $2.6 billion last quarter, compared to Amazon's $52.9 billion.

Amazon has become the destination of choice for internet merchants because of its enormous audience, and because of its plug-and-play fulfillment system that makes delivering orders easy for sellers. Nearly half of US online retail sales move across its platform, according to eMarketer.

Third-party sellers — who set prices for their own products, rather than selling to Amazon wholesale — now account for more than half the units sold on the site.

eBay emphasized in the complaint that it is a "pure open marketplace" that doesn't compete against its own sellers, as Amazon does with its private-label brands.

The plaintiff asked for damages to be determined by a jury trial.

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