EBay: OS for the highest bidder

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Having captured most of the Internet auction market with its own site, eBay has a new goal: to become an "operating system" for e-commerce on the Web. For the past six months, the company has been developing technology that will let Web companies display eBay auctions -- whether listings for baseball cards, stamps or automobiles -- on their own independent sites, which could greatly expand the visibility of eBay auctions among potential buyers. EBay also hopes the new technology will win further support among programmers who create software aimed at eBay's armies of sellers. The company plans to begin testing the technology, which it has discussed publicly in recent months, with programmers and independent Web sites beginning Monday. It says it is already negotiating with several sites about using its listings. Other Internet companies have made similar attempts to expand their services beyond a single site. AltaVista, for instance, allows independent sites to use the AltaVista search-engine technology. The technology allows users to search AltaVista's vast index of Web sites without going to AltaVista.com. EBay's new technology -- with the decidedly uncatchy name of eBay API (for eBay application programming interface) -- reflects the company's growing belief that it can get a piece of e-commerce beyond the confines of its popular online trading post at eBay.com. Application-programming interfaces are hidden functions, usually found in computer operating systems like Microsoft's Windows, that make it easier for programmers to create software applications without coding basic features like screen menus and printing capabilities from scratch. Indeed, Windows is a model for their own efforts, eBay executives say. "I think of it as the enabling platform for e-commerce," Maynard Webb, president of eBay technology, says of the new technology. EBay could ever achieve the pervasiveness of something like Windows, and its new technology is far simpler than the millions of lines of programming code contained within an operating system. It's also a risky strategy to draw inspiration from Microsoft, given the software giant's difficulties with antitrust enforcers. Yet eBay's swift rise to dominance in the Internet auction market in the past several years, all the more remarkable in the face of stiff challenges from Yahoo! and Amazon.com, gives the company a powerful base from which to launch new commerce initiatives. EBay is estimated to control more than 80 percent of the online consumer auction market, with Yahoo and Amazon its closest competitors, according to market-research firm Gomez. Here's how eBay says the new technology will work: Using it, any Web site that wants to add auctions to its site will be able to subscribe to "syndicated" listings ranging from the specific to the general. A site for sports fans, for instance, could subscribe to eBay auctions for sporting goods, team memorabilia and trading cards. If the site catered to a more narrow audience, it could subscribe only to auction listings for gear related to the New York Yankees. Subscribers could also choose to display listings, including descriptions, current bids and the auction closing time, for only those items that the site itself posted for sale on eBay. The listings available to sites won't only be auctions. EBay runs a fast-growing Internet marketplace for fixed-price goods called Half.com. EBay believes the fixed-priced price format will eventually become a larger part of eBay.com sales as well. EBay executives believe the syndicated listings will have broad appeal to other Internet commerce and media sites that want to give users more shopping options without building their own stores. Web sites that want eBay listings will not receive a cut of transactions executed through their site unless they own the listed items. But eBay says it will consider sharing some revenue with sites that drive large amounts of user traffic to its auctions. The company believes it will eventually be able to persuade some sites that already sell goods to replace their current inhouse electronic-commerce systems with eBay's technology. For eBay, broader listings could boost exposure to a Web audience that is still largely unfamiliar with eBay's bazaar. "One of the biggest challenges we have is that our reach is still relatively tame in Net terms," says Jeff Jordan, senior vice president and general manager of eBay US. While eBay users stay on the site far longer than on other sites, eBay reached a relatively modest 17 million people, or 17 percent of all active Internet users, in October, according to the Nielsen//Netratings measurement service. Yahoo, the second most popular site, had 64 million visitors, or 63 percent of active Internet users. Some sites say they are intrigued by the eBay plan. Gene Hoffman, president and chief executive officer of Emusic.com, an Internet music company, says he would consider adding rock-memorabilia listings to one of Emusic.com's properties, Rollingstone.com. "Additional content is always interesting," Hoffman says. "It's something we'd look at, definitely." The new eBay technology is also aimed at bolstering ties to Internet sellers by giving them better software programs for conducting auctions. As eBay's marketplace has exploded in growth, an increasing number of independent Internet companies have cropped up to serve online power sellers with services ranging from auction-management programs to services for resolving buyer-seller disputes. But those companies have connected their programs to eBay through primitive techniques that often fail when eBay modifies its site. For instance, closely held Andale offers a service to eBay sellers that allows them to schedule and automatically post auction items to eBay. Whenever eBay makes even minor changes to its Web page for submitting auction items, Andale's service breaks down. "Every time they change a form, our systems are out of synch with eBay," says Munjal Shah, chief executive and president of Andale. The new eBay technology should remedy the problem. Using an Internet-programming technology called extensible markup language, or XML, eBay has created a standard set of instructions that make it easier for independent software companies to hook into the eBay site. The changes will effectively create hidden labels for common auction data like prices, closing times and item descriptions so that independent software developers don't have to guess where such data are on eBay's Web pages. Winning support among developers has been a key part of Microsoft's success. The strategy led to a large body of application software that made Windows useful for users. EBay would like to see a similar set of independent programs for its site. The company, like Microsoft, will tightly control its programming interfaces. EBay will also seek an enrollment fee and a monthly licensing fee from software developers that wish to use its new technology. Executives decline to give more detail on the fees, but Andale's Shah, who has talked to eBay about licensing the technology, says the fees are reasonable. "It's not onerous," he says. Executives from two other companies -- SquareTrade, a San Francisco provider of dispute-resolution services, and The Topps, a New York publisher of baseball cards -- say they plan to connect their Internet services to eBay using the new technology. But eBay needs to tread lightly in pursuing a Microsoft-like strategy. Just as Microsoft's huge share of the operating system market and tactics in dealing with competitors got it into hot water with regulators, eBay's conduct toward some competitors has invited scrutiny by antitrust enforcers at the Department of Justice. (A Department of Justice spokeswoman didn't return a call for comment on the status of the inquiry.) The inquiry by the Justice Department followed eBay's tussles with "auction aggregation" sites that, using their own technologies, displayed eBay listings alongside those from Yahoo!, Amazon.com, and other auctions sites. EBay objected to the manner in which its listings were mingled with those from competing sites. Last year, eBay sued one auction aggregator, Bidder's Edge, Mass., which later countered with its own antitrust complaint against eBay. Both cases are pending in a federal court in California. EBay executives deny the company has treated potential rivals unfairly (the company says it's talking to auction aggregators about licensing the new technology). Nor do they believe the company's new technology will give it a chokehold on all transactions on the Internet. "We will not have a monopoly on commerce," eBay's Jordan says. "I think our company approach is kind and gentle. If you look at the people we've alienated, it's a pretty short list." Take me to the e-commerce special. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read what others have said.

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