eBay's Skype Fiasco: What Were They Thinking? 19 comments
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It is astounding that eBay forked (EBAY) over $3B for Skype and didn’t actually buy Skype’s underlying technology.
It is amazing that they didn’t realize this and outright criminal that they didn’t get a fully-paid, irrevocable, perpetual, non-exclusive (exclusive for the purposes of international calling) license.
Om Malik has all of the links you need:
- Skype Founders suggest they still own underlying technology to Skype
- Will Joltid turn eBay’s planned Skype IPO into a nightmare?
- Why eBay Should Accept Skype Founders’ Buyout Offer.
Now this will probably get settled one way or another, and as a non-Skype user, non-eBay shareholder, I don’t really care either way.
But a few points:
- This proves that just because you hire expensive lawyers doesn’t mean anything.
- One more example of upward failing. To think this woman, Meg Whitman, could have been our Treasury secretary. I am sorry, however wonderful Ms. Whitman was, this was done on her watch and it’s just appalling in terms of botched due diligence.
- With all due respect to Skype founders Niklas Zennstrom and Janus Friis, you have to wonder, will anyone ever buy a company from them again? I mean, sure Viacom (VIA) /CBS (CBS) and a number of VCs invested in their next venture Joost (hmm… is there such a thing as karma?), but this was before this bit of news was out. Ultimately, I am not sure I would have a lot of comfort and confidence doing a deal with these guys.
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This article has 19 comments:
As an antiques collector, I have used eBay (about half a dozen times) and Sykpe (often to talk to market contacts [and family] around the world).
Fellow collectors hoped Skype would add value to eBay, although they were not sure how (!) Sadly, eBay is going down the pan (why end live auctions?) and the fear is that they will drag Skype with them.
eBay should accept the Skype founders' buy-back offer before it is too late. Otherwise ... I just wish I could afford some Google shares.
Christopher Proudlove
Ebay got into a bidding war over Skype. You'd have thought they'd have know better.
Sounds like the originall founders of Skype beat eBay at their own game!!
LMAO!!!
Kudos to Niklas Zennstrom and Janus Friis!! You got the gobbling monster before they got you! Keep your technology and let eBay marinate in their own greed!
Marty
"Knee jerk" reactions are.
PS to user 465366,
Thousands upon thousands have lost their "full-time incomes" in the past year or so due to insane polices now in place.
Please research before posting.
On Aug 03 11:20 AM Patricia013 wrote:
> Good article! To understand it one must get their head out of the
> numbers and look at the company itself! While Paypal is wildly successful
> Skype has a flaw which will be thrashed out in court...Ebay stands
> a good chance of losing! Ebay's core - the money it makes thru fees
> and something investors know or care little about - is DECLINING
> year over year with each quarter for the last three quarters! Analysts
> like Barrons do NOT know the inner workings of the company or why
> Ebay's core is failing. Analysts have been ignoring this fact!
> Their bottom line is all the numbers crunched together. Sooner or
> later Ebay's decline in core will not be able to hide behind the
> success of Paypal and Skype! Wake up folks. This company is sick
> and its being touted erroneously as the best thing since sliced bread!
“Noise” Donahoe and some market analysts seem to believe that PayPal’s manning of the pumps will keep the good ship “eBay” afloat. I certainly would not put my money on the “clunky” PayPal for the long term. Assuming that the parties don’t have some agreement to not compete, I have no doubt that eventually those other well known “loan sharks”, the major credit card companies, will get off their butts and introduce a similar universal card/terminal-less on-line payments system that the participating banks can incorporate into their internet banking systems—and they, at least, will do it properly—and that, my friends, will undoubtedly be the end of PayPal outside of the Donahoe-dwarfed eBay marketplace ...
I recall that Donahoe has been quoted somewhere as saying that the door is slightly ajar for a potential spinoff of his company’s online payments unit. If this is correct it will be the first logical thought that this guy has ever had; he otherwise clearly has no idea of what he is doing at eBay. If that MBA taught him anything then he should be using whatever skills he does possess to negotiate with the banks to take PayPal and integrate it into their online payments system—in exchange for an appropriate interest in the consolidated business, of course. Because, the more successful PayPal is, the more likely it is that the banks will finally get off their butts and introduce a like system; if and when that happens the banks will do the job properly and will exterminate PayPal for being the “irritating insect” that it is.
Is that blood that I can see in the water? And are those sharks that I can see circling?
For anyone with an interest in watching eBay, a detailed case study of shill bidding and the abuse of eBay’s proxy bidding system—all exacerbated by eBay’s introduction of “hidden bidders”—plus a detailed general criticism of eBay’s “clunky” auction platform and policies, at
www.auctionbytes.com/f...
Synopsis:
very little of the auction system security, that eBay claims to offer buyers, exists in fact;
contrary to their claim, it can be demonstrated that eBay has no “sophisticated” nor “proactive” system in place for the detection of undisclosed vendor (“shill”) bidding and indeed appears to do nothing about such criminal activity except as a reaction to a user’s report of suspicious bidding activity;
eBay appears to have no effective matter-of-course verification of users; unscrupulous users can apparently have as many user IDs as they may have email addresses;
many of eBay’s “rules”, concerning the retraction of bids, cancellation of auctions, etc, are nominal only and are no bar to the machinations of the unscrupulous seller;
as a result, eBay’s “proxy” bidding system is so open to abuse by such unscrupulous sellers that to use it, as eBay intends it to be used, can be an invitation to pay your maximum;
the lack of any such effectual security effectively “aids and abets” unscrupulous shill-bidding sellers to defraud naïve buyers;
the masking of user IDs with non-unique, absolutely anonymous, bidding aliases serves little other purpose than to obscure such shill bidding;
the quarterly changing of even these non-unique, absolutely anonymous, bidding aliases serves absolutely no other purpose than to stop experienced eBay users from tracking suspicious bidding activity over time;
the anonymous, individual bidder Bid History Detail pages, supposedly supplied to offset the absolute masking of bidding IDs, can present an ambiguous view and are therefore of dubious value;
anyone naïve enough to “nibble” bid on a seller-elected “private” auction (ie, “User ID kept private”), on the balance of probability, is going to be defrauded;
when suspected fraud is reported, and is found by eBay to be proved to their satisfaction, eBay will conceal that fact from the victim of the fraud; this then is the concealing of a crime after the fact, surely, a crime in itself;
eBay will never acknowledge to a victim that a fraud has been perpetrated, nor indeed will they acknowledge that such fraud is even a problem on eBay; eBay therefore sees no reason to provide any mechanism to aid in the recovery of any monies so defrauded;
if eBay did have any truly sophisticated and proactive system in place for the detection and control of shill bidding, we undoubtedly would not now be having this debate; and
for those buyers (and honest sellers) who embrace eBay believing that eBay acts as an “honest broker” between buyer and seller, I can only say that there are fairies at the bottom of your garden too.
"Thousands upon thousands" have lost their full time income? But dderricott said more than a million have full time incomes from eBay.
So now just under a million have a full time income from eBay?
Sorry about your personal situation, but it doesn't sound like eBay is doing too bad for most people.
By the same token, I DO hope this tanks her California gubernatorial aspirations.
On Aug 03 12:03 PM Philip Cohen wrote:
> The eBay Marketplace is clearly going down the toilet.
>
> “Noise” Donahoe and some market analysts seem to believe that PayPal’s
> manning of the pumps will keep the good ship “eBay” afloat. I certainly
> would not put my money on the “clunky” PayPal for the long term.
> Assuming that the parties don’t have some agreement to not compete,
> I have no doubt that eventually those other well known “loan sharks”,
> the major credit card companies, will get off their butts and introduce
> a similar universal card/terminal-less on-line payments system that
> the participating banks can incorporate into their internet banking
> systems—and they, at least, will do it properly—and that, my friends,
> will undoubtedly be the end of PayPal outside of the Donahoe-dwarfed
> eBay marketplace ...
>
> I recall that Donahoe has been quoted somewhere as saying that the
> door is slightly ajar for a potential spinoff of his company’s online
> payments unit. If this is correct it will be the first logical thought
> that this guy has ever had; he otherwise clearly has no idea of what
> he is doing at eBay. If that MBA taught him anything then he should
> be using whatever skills he does possess to negotiate with the banks
> to take PayPal and integrate it into their online payments system—in
> exchange for an appropriate interest in the consolidated business,
> of course. Because, the more successful PayPal is, the more likely
> it is that the banks will finally get off their butts and introduce
> a like system; if and when that happens the banks will do the job
> properly and will exterminate PayPal for being the “irritating insect”
> that it is.
>
> Is that blood that I can see in the water? And are those sharks that
> I can see circling?
>
> For anyone with an interest in watching eBay, a detailed case study
> of shill bidding and the abuse of eBay’s proxy bidding system—all
> exacerbated by eBay’s introduction of “hidden bidders”—plus a detailed
> general criticism of eBay’s “clunky” auction platform and policies,
> at
> www.auctionbytes.com/f...
>
> Synopsis:
>
> very little of the auction system security, that eBay claims to
> offer buyers, exists in fact;
>
> contrary to their claim, it can be demonstrated that eBay has no
> “sophisticated” nor “proactive” system in place for the detection
> of undisclosed vendor (“shill”) bidding and indeed appears to do
> nothing about such criminal activity except as a reaction to a user’s
> report of suspicious bidding activity;
>
> eBay appears to have no effective matter-of-course verification
> of users; unscrupulous users can apparently have as many user IDs
> as they may have email addresses;
>
> many of eBay’s “rules”, concerning the retraction of bids, cancellation
> of auctions, etc, are nominal only and are no bar to the machinations
> of the unscrupulous seller;
>
> as a result, eBay’s “proxy” bidding system is so open to abuse
> by such unscrupulous sellers that to use it, as eBay intends it to
> be used, can be an invitation to pay your maximum;
>
> the lack of any such effectual security effectively “aids and abets”
> unscrupulous shill-bidding sellers to defraud naïve buyers;
>
> the masking of user IDs with non-unique, absolutely anonymous,
> bidding aliases serves little other purpose than to obscure such
> shill bidding;
>
> the quarterly changing of even these non-unique, absolutely anonymous,
> bidding aliases serves absolutely no other purpose than to stop experienced
> eBay users from tracking suspicious bidding activity over time;<br/>
>
> the anonymous, individual bidder Bid History Detail pages, supposedly
> supplied to offset the absolute masking of bidding IDs, can present
> an ambiguous view and are therefore of dubious value;
>
> anyone naïve enough to “nibble” bid on a seller-elected “private”
> auction (ie, “User ID kept private”), on the balance of probability,
> is going to be defrauded;
>
> when suspected fraud is reported, and is found by eBay to be proved
> to their satisfaction, eBay will conceal that fact from the victim
> of the fraud; this then is the concealing of a crime after the fact,
> surely, a crime in itself;
>
> eBay will never acknowledge to a victim that a fraud has been perpetrated,
> nor indeed will they acknowledge that such fraud is even a problem
> on eBay; eBay therefore sees no reason to provide any mechanism to
> aid in the recovery of any monies so defrauded;
>
> if eBay did have any truly sophisticated and proactive system in
> place for the detection and control of shill bidding, we undoubtedly
> would not now be having this debate; and
>
> for those buyers (and honest sellers) who embrace eBay believing
> that eBay acts as an “honest broker” between buyer and seller, I
> can only say that there are fairies at the bottom of your garden
> too.
"Sorry about your personal situation, but it doesn't sound like eBay is doing too bad for most people"
You know nothing about my "personal situation!"
If you have sympathy to give, give it to the small time sellers that have had their full or part time incomes taken away due to eBay creating an un-even playing field. These are the people that built eBay, back when it was "just a venue."
Apathy seems to be running rampant these days.
I felt in any way "cheated".
Doug
An example of Meg "A monkey could drive this train" Whitman's technological expertise.
She couldn't even get the quote right: "A chimpanzee and two trainees could run her." Montgomery "Scotty" Scott, Star Trek III (1984)
Interesting that the "1.3 million U.S. sellers" earning a full time living on eBay MYTH continues to survive.
www.newsweek.com/id/13...
May 2008
My eBay Job
By Daniel Gross
* "a 2006 study conducted by ACNielsen on behalf of eBay. The company surveyed eBay sellers around the globe, including 2,000 in the United States. And it concluded that "approximately 1.3 million sellers around the world use eBay as their primary or secondary source of income," with an estimated 630,239 in the United States"
* "Even the minority of sellers who meet the company's "power seller" requirements aren't coming close to "making a living" selling on eBay. To reach the lowest level, bronze sellers must rack up $12,000 in sales (sales, not profits), or move 1,200 items over the course of a year."
* "A bronze-level power seller isn't making a full-time living on eBay," says Cindy Shebley, who began selling on eBay in 1999. "They have to really crank it up and get into higher tiers, like titanium." Levels rise from silver ($3,000 or 300 items per month) to Titanium ($150,000 or 1,500 items per month).
www.washingtonpost.com...
EBay Sellers Fell Into Careers That Fill Their Lives
By Leslie Walker
June 30, 2005
* "eBay reports more than 100,000 merchants belong to its multi-tiered "power-seller" group, which requires sales of at least $1,000 a month"
A rough extrapolation gives an estimate of about 150,000 PowerSellers, who have "sales of at least $1,000 a month". And that income does not take into account the 8% eBay takes in fees, nor a seller's expenses.
The U.S. 2009 Federal Poverty line for one person is $10,830 a year.
.
"Of course, there's a big difference between making a buck and making a living, between a sometime-thing and a steady gig. The notion that 630,000 Americans—a number roughly equal to the population of North Dakota—are making something approaching a living wage selling on eBay is a little rich." Daniel Gross (www.newsweek.com/id/32222)
.
Phrase of the day: www.urbandictionary.co...
I carefully watch my area of interest, and I can assure you that there are unscrupulous sellers defrauding naive buyers every day. And I don't use the term "naive" in any derogatory sense; simply that if you don't watch those Bid Histories very critically, you will get taken to the cleaners. Is it any less criminal that some are not aware that they been cheated?
Then, some say that "ignorance is bliss".
The *synergy* of Skype and eBay was easy enough to figure out BEFORE it was purchased, back in Sept of 2005. It's actually a simple test that (almost) anyone can do.
Do you like telemarketers calling you? If you had a yard-sale, would you enjoy phone calls about all of your $1 and $2 items?
If you answered NO and NO, then you understand why Skype was/is a flop for ebay.
If you aren't sure of your answers or if you let your maid do those "menial tasks", or if you answered YES and YES, then you are eBay CEO material.
It really is that simple. They (Meg W and John D) really are that clueless.