Is eBay Right to Ban Third-Party Search Engines?

Earlier this week, it was reported that eBay, Inc. and AuctionWatch.com failed to resolve a conflict that may now have to be settled by a judge.

The disagreement was sparked when eBay told AuctionWatch that the upstart search engine was no longer permitted to search its site.

This dispute is not a case of eBay singling out AuctionWatch.com, whose engine allows its users to simultaneously search various auction sites for different items. Over the last couple of months, the Palo Alto, California-based eBay has barred BiddersEdge.com and RubyLane.com, among others, from searching the nearly 3 million auction items on its site.

Cease and Desist

BiddersEdge and RubyLane have reportedly complied with eBay’s edict — citing the potential astronomical costs of fighting the titan in court. However, AuctionWatch.com has not decided how it will respond to eBay’s latest cease and desist order.

The dilemma is that being cut off from eBay is tantamount to being cut off from 90 percent of the action.

eBay’s Side

Of course, from eBay’s viewpoint, these companies are little more than parasites who are cashing in on its hard work and initiative. Additionally, eBay — which has had its fair share of crashes — makes the strong point that millions of queries generated by multiple search engines have the potential to slow down its site.

Nonetheless, some industry observers liken the situation to the instant messaging duel between Microsoft Corp. and America Online.

Some analysts also suggest that before resorting to the courts, eBay may first try to block auction search engines in much the same way that AOL blocked Microsoft’s instant messages.

If a showdown ultimately ends up in court, I feel it would be bad news for the entire e-commerce community. In my view, once a judge is interjected into the marketplace, anything can happen.

Just look at the current Microsoft antitrust trial.

What’s Fair Is Fair

I believe that eBay is wrong to block auction search engines from its site, because to do so is to stifle the free market. Besides, what message is it sending to potential bidders on its site? Is it saying that it fears competitive bidding?

Having said that, it cannot be denied that auction search engines are getting — or have been getting — a free ride on eBay’s back.

I think a fair solution to this conflict would be for the search engine companies to pay eBay a realistic percentage or a flat fee for searching its site. In addition, I believe that they should contribute to the upkeep of eBay’s network infrastructure — especially if they are contributing to it being overloaded.

This way, eBay can never be accused of setting up a monopoly, and the search engine companies can never be accused of being leeches.

Too bad I’m not a judge.

What do you think? Let’s talk about it.