SS2BM Means Ebay Sucks

For some reason I began investigating eBay an hour or so ago after reading a comment . What I've found is a fascinating example of monopolistic business behavior (with its usual despotic psychological overtones). I've been hearing about the borderling illegal tactics of eBay through Paypal (eBay's subsidiary - www.paypalsucks.com) for years now - suspending people's accounts and refusing to let them transfer money. People who tried to resell PS3s or Xbox 360s ran into this problem. Why eBay cracks down on people like this is somewhat puzzling, but it will drive their sellers (and eventually their customers) away. When unhappy eBayers protest eBay fee increases and attempt to point people to better alternatives they are silenced. A community has grown up around eBay alternatives at the Pheebay forum.

The good news is that there are alternatives. eCrater is completely free, so avoid the fees and head on over there when you're looking to bid for something! Why should a customer avoid fees? Economists have been telling people forever that fees are ultimately passed on to the consumers, and there is no better example of this than online auction sites. eCrater will certainly be cheaper than eBay. Let's hope eBay doesn't buy their competitors just as they are starting to take off - though I'm sure eBay will try. The big new thing is for companies to buy competitors and shut them down, which is what eBay did with Paypal competitors.

eBay is currently facing a class action antitrust lawsuit. Paypal settled one class-action lawsuit in 2004 and lost another one more recently.

eBay has a network monopoly. In the days of the internet these monopolies are ubiquitous. Myspace/Facebook, Digg, Microsoft, and even these Wiki sites are protected by network monopolies.

As some economists forget, the goal is always social good - and when market failure happens, social good isn't maximized. That justifies intervention in the market. On the other hand, should the government legislate that eBay stop it's oppressive tactics? At this point, I think not. Instead, let them keep angering their customers - that gives people the incentive to seek a newer, better alternative - in this case, eCrater: a completely free auction site.