Meg Whitman is a conservative gubernatorial candidate for California campaigning on fixing California's economic woes among other things by pointing to her former title as Chief Executive Officer for eBay for a decade. Typically, when businessmen and women run for office using their work in the private sector as a qualifier, there is usually a correlation drawn between the way the worked in their companies and how they plan on governing - take New York City Mayor Michael Bloomberg, who set up a "bullpen" in city hall where he works in a cubicle among his staff.
With that being said, what can be expected from Whitman? eBay's business practices may be able to offer some insight into how the governor will run the state of California.
In the beginning, most transactions were conducted using paper checks or money orders - only those with pricey merchant accounts were capable of accepting credit card payments. eBay's solution was to team up with Wells Fargo and Visa, offering their own online payment service, Billpoint, but that experiment failed to competitor Paypal - until eBay bought them out with $1.5 billion in stock. eBay's acquisition of PayPal caused some worry for those who operate on the online auction giant, fearing eBay will have too much power over a business they have built on the backs of others.
"I don't want to get rid of PayPal, but I may have to down the road because I just don't think it's right," said Donna Pelletier 8 years ago, who sells books and collectibles on eBay. "My auctions are supposed be my business. I don't want eBay having total control of it."
Pelletier's comments couldn't have been more prophetic. Now that eBay controls their own payment service, they skim even more off the profits of individual's auctions.
eBay collects money by charging insertion fees for items listed on their site, and those fees can grow depending on the options you choose, like how many pictures you wish to include or if a thumbnail image will be displayed beside your listing on the main search page. eBay also collects money on the back half of the sale, taking a percentage of the auction.
eBay has also exercised greater control over those wishing to use their site as well, initiating price controls for various items by determining what is appropriate for shipping and handling fees. For example, I had tried to sell old computer software using flat rate boxes, but according to eBay, the flat rate box was too much, exceeding the average shipping cost for like items, which were shipped using Media Mail.
Essentially, eBay has found a way to take money from every aspect of the auction, from the insertion fees, to skimming from the profit, to charging to use it's payment service - all while eliminating competition. Is this what can be expected should Whitman win election? Will taxpayers experience what sellers have already dealt with for years?
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