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Bidder's Edge sues eBay
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February 8, 2000: 12:17 p.m. ET
Countersuit charges online auction site with unfair business practices
By Staff Writer Michele Masterson
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NEW YORK (CNNfn) - In the latest move in the online auction wars, Internet auction aggregator Bidder's Edge has filed antitrust counterclaims against Web auctioneer eBay.
Burlington, Mass.-based Bidder's Edge also said Tuesday it has signed a letter of intent to be acquired by OpenSite, an Internet software provider based in Research Triangle Park, NC. Financial terms were not disclosed. OpenSite develops commerce sites for business-to-business, business-to-consumer and consumer-to-consumer clients such as CNET (CNET: Research, Estimates).
Bidder's Edge's counterclaims charge eBay with monopolization, attempted monopolization, unfair business practices and interference with contractual relations. Bidder's Edge has asked a federal court to award unspecified damages and prohibit eBay from engaging in anti-competitive and exclusionary behavior.
eBay Chief Operating Officer Brian Swette, speaking on CNNfn's "In the Money," said the company wasn't against the concept of auction aggregators.
"It's how Bidder's Edge is going about doing it, both in spidering our site as well as not presenting the data to the customer in the right way," that eBay objects to, Swette said, adding: "We're going to protect our own interests."
Swette went on: "We're always willing to work with aggregators. We have a couple of deals out there already. We're not against people being exposed to eBay's listings, we just want to make sure that it's done in the right way for the consumer."
In December 1999, eBay (EBAY: Research, Estimates) filed suit against Bidder's Edge in San Jose, Calif., Federal District Court, charging that Bidder's Edge trespassed on eBay's site by compiling auction data without eBay's permission. Bidder's Edge aggregates auction listings from more than 100 online auctioneers, including Amazon (AMZN: Research, Estimates) and Yahoo! (YHOO: Research, Estimates), allowing users to see the status of Internet auctions. Bidders then must visit the individual auction site to take part in auctions.
Reports Friday said the Department of Justice was investigating eBay's business practices in attempting to block Bidder's Edge and fellow auction aggregator AuctionWatch from grabbing auction listings from eBay servers. Both Bidder's Edge and AuctionWatch officials were interviewed by the DOJ to determine if eBay employed anticompetitive measures against the sites.
AuctionWatch's vice president of marketing, Dan Neary, told CNNfn.com that officials from the DOJ contacted the company sometime during the past 2 weeks.
"We were approached by the DOJ and had a conversation with them," Neary
said. "While we can't go into the details or specifics, it did pertain to eBay and issues involving our universal search product."
"We did not actively search them (the DOJ) out; they approached us,"
Neary said.
Both Bidder's Edge and AuctionWatch said they initially negotiated with eBay to list its items to determine licensing fees, but that they did not reach agreement.
In November 1999, eBay blocked AuctionWatch crawlers from searching eBay servers, but in January, AuctionWatch found a way around the block and eBay listings were back on the AuctionWatch site.
Sue Rothberg, Internet auction analyst at Lincoln, Mass.-based Gomez Advisors, which tracks consumer Internet usage and trends, said a case could be made for either side.
"eBay is saying Bidder's Edge is taking proprietary data that belongs to them and their members," Rothberg said. "On the other hand, Bidder's Edge has the argument that all they're doing is providing a search engine for auctions."
"But unlike other auction sites, such as Yahoo! and Amazon, eBay is a destination site," said Rothberg. "All their traffic comes to their site just for auctions, whereas Yahoo! and Amazon get traffic from a variety of areas, so eBay could argue that their traffic is being threatened and that their customers are being exposed to their competitors."
"But eBay really has the upper hand here," Rothberg said. "The lion's share of Bidder's Edge listings comes from eBay. eBay doesn't need Bidder's Edge to survive, but Bidder's Edge needs eBay. Their business is at stake here."
Nick Godfrey, director of marketing at Bidder's Edge, told CNNfn.com that eBay holds an 88 percent market share of the online auction space and is attempting to prevent it from competing in that arena.
"It's like David and Goliath," said Godfrey. "Because of their size and leverage, eBay can spend one hundred times what we have on legal fees, advertising and promotion."
"The crux of the situation is that we are trying to provide a service for consumers," said Godfrey. "We are providing information about 6 million items in 2700 categories."
Bidder's Edge CEO James Carney said the implications from this case have far-reaching results.
"There's a bigger issue we're concerned with, and that's the openness of the Web," said Carney. "If allowed to prevail, eBay will set a precedent that could have potentially disastrous implications for every search engine on the Web. It could ultimately mean the end of the Web as we know it," Carney said.
On Tuesday, eBay also announced a four-year alliance with Disney's Go.com portal, offering consumer-to-consumer trading. In addition, co-branded merchant-to-consumer eBay/Disney sites will be launched on Disney.com, ESPN.com and ABC.com
In midday trading Tuesday, eBay rose 2.6 percent, or 4-11/32, to 173- 29/32. 
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