eBay's PayPal Change - Is It A Victory?

News this past week that eBay has chosen not to contest the ACCC's draft ruling on their requirement for all sellers to accept Paypal only on their Australian site have been met with sighs of relief around the country I'm sure, but is it really a victory?

There was a thought-provoking (read that rage provoking) article on this issue in the Asian Wall Street Journal on June 26th, in which the author contested that eBay / Paypal has the perfect right to set the price for the products and services that they offer, and that the ACCC investigation "smacks of a basic misunderstanding of how market competition really works." I don't think anyone would disagree that a business, any business does have the right to set the price for the products and services they offer - it's up to their competition and clientele to determine whether that's competitive or solid value for money. The argument against a business having that freedom is made when the opportunity to choose an alternative isn't palatable or apparent, as is the case with eBay in Australia.

The reason eBay has been / is successful is due to it's size and traffic volumes - the competitors in Australia simply aren't at a comparable level yet. So the choice that buyers and sellers have if they don't like eBay's prices or policies are to either trade elsewhere or stop trading altogether. Is that a fair choice to impose on a group of people who have come to rely on eBay for their sole source of income? Here's another question for you, is it fair for a business to come up with a model that appeals to millions of people around the world, risk effort and capital in pursuing that model, then once it's become successful to have a corporate regulator to limit the price that they charge their clients?

All of these are great questions with no easy answers - what I do know is that "Atlas Shrugged" is one of the most formative books I've ever read in my life, and I know what the main (fictional) characters of that book would have thought of the ACCC's efforts, or those of the thousands of sellers that are complaining about eBay's actions. I certainly know what the (deceased) author's opinion would have been! PS - the above book is slated for production into a movie during 2009, Angelina Jolie has been cast in the lead female role.

Category: eBay