eBay Takes Legal Action Against Amazon: Here’s What You Need to Know
If found liable, Amazon could face significant fines and operational restrictions impacting its business practices.
eBay Inc. (EBAY) initiated legal proceedings against Amazon.com Inc. (AMZN) on Wednesday, accusing the retail giant of unlawfully recruiting its sellers.
The lawsuit, filed in Santa Clara County, California, alleges that Amazon employees created fake eBay accounts and used eBay’s internal messaging system to contact sellers, encouraging them to switch their sales to Amazon’s platform.
According to eBay, dozens of Amazon sales agents across the U.S. and internationally participated in this covert recruitment campaign, sending hundreds of messages since 2015.
eBay claims these actions breach its user agreement and are part of a coordinated strategy directed from Amazon’s headquarters.
"For years, without eBay’s knowledge, Amazon has systematically exploited eBay’s proprietary member-to-member messaging system to lure top sellers away," eBay stated in the lawsuit.
To avoid detection, Amazon representatives reportedly spelled out their email addresses and urged sellers to communicate via phone. eBay was alerted to this misconduct by one of its sellers recently and, upon verification, issued a cease and desist letter to Amazon.
An Amazon spokesperson responded that the company is "conducting a thorough investigation into these claims."
Potential Consequences for Amazon Extend Beyond Fines
eBay demands that Amazon immediately cease misusing its messaging platform and compensate for damages, though the exact amount remains confidential. Should a jury find Amazon in violation of the California Comprehensive Computer Data Access and Fraud Act, Amazon could face operational constraints in addition to financial penalties.
Both eBay and Amazon depend heavily on third-party sellers and earn commissions from their sales. eBay’s entire retail sales come from independent sellers, and Amazon has been increasingly reliant on third-party merchants to drive growth. Notably, over half the products sold on Amazon last year were from third-party sellers. Amazon also provided discounts on third-party items and reimbursed sellers for associated costs during the same period.
Amazon’s stock dipped 0.37% in pre-market trading, aligning with broader market trends.
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