Tech-Trivia : Did You Know? This Week in Tech-History …

28 Years Ago : eBay (& Amazon by Comparison)

Whilst eBay’s market cap is dwarfed by that of Amazon (i.e. circa 24 billion dollars compared to circa 1.4 trillion dollars), it’s easy to forget eBay helped shape online purchasing too.

Before it was rebranded as eBay in 1997, the site was originally called AuctionWeb. Founded by Pierre Omidyar in 1995, it was an experiment to create an online venue for person-to-person auctions and lacked any heavy investment. In fact, the hosting company were just charging thirty dollars per month to for the entire website when he started up, until they said they’d no longer host it for that price due to the growth in traffic, thereby forcing him to monetise his website via his sellers, which worked.

With his degree in computer science behind him and having worked in a subsidiary company of Apple, he was also working on various other web projects. He’d also co-founded another company called Ink Development, a company initially focused on developing software for pen-based computing. The company transformed its direction and became an e-commerce platform named eShop, which was later acquired by Microsoft in 1996.

In short, Pierre was the right person in the right place at the right time. And so was Elon Musk (more on him later).

The Unexpected First Listing

The first item ever listed on AuctionWeb was a laser pointer. To be more precise, it was a broken laser pointer. This wasn’t a mistake or an oversight. Omidyar had bought it for his own use but found out it was faulty. Rather than discarding it, he decided it would make an interesting first listing on his experimental auction site. He listed it clearly mentioning it was non-functional. To his astonishment, the laser pointer garnered bids and finally sold for $14.83.

Intrigued by someone paying for a known broken item, Pierre out to the buyer who simply responded that he was a collector of broken laser pointers. This quirky initial transaction showed the potential of a vast, unpredictable, and diverse online marketplace.

The Beanie Baby Phenomenon

While the broken laser pointer was AuctionWeb’s first sale, it was the Beanie Baby craze in the mid-90s that truly skyrocketed the platform’s popularity. Beanie Babies, those small plush animals filled with plastic pellets, became a massive collector’s item. AuctionWeb became a primary marketplace for these avid collectors, providing them a platform to buy, sell, and trade these toys.

The Beanie Baby phenomenon showcased the strength of the platform in bringing together niche audiences globally and the success also signalled the beginning of a new era where the average person could become an entrepreneur from the comfort of their own home.

From AuctionWeb to eBay

Seeing the growing potential, Omidyar soon renamed AuctionWeb to “eBay,” which was short for Echo Bay, the name of Omidyar’s consulting firm. The rest is history! eBay went public on September 24, 1998.

On its first day of trading, the stock’s price of $53.50 soared well past the initial target of $18, emphasising the optimism investors held during the dot-com boom. Unlike many that fell by the wayside, eBay is now a business that operates in over 30 countries with a market cap peaking at 80.6 billion dollars.

Amazon and eBay – Different Approaches.

While eBay and Amazon both started as online marketplaces in the 1990s, they evolved with different business models and strategies that have influenced their trajectories. eBay started off as an online auction place, although plenty of people and businesses sell via their ‘Buy Now’ function as an online shop.

There are many possibilities as to why eBay hasn’t reached the same magnitude as Amazon and here are a few :

  1. Business Model: eBay began as a peer-to-peer auction site, allowing individual sellers and buyers to negotiate prices. This gave eBay a unique identity but also meant slower and less predictable transactions. Amazon, on the other hand, started as a book retailer and then expanded its product range, focusing on selling new products at fixed prices.
  2. Fulfilment and Logistics: Amazon invested heavily in fulfilment-centres and logistics, creating a vast and efficient infrastructure for storage, packing, and shipping. This allowed them to ensure rapid delivery, leading to services like Amazon Prime. eBay, on the other hand, relies on individual sellers to handle shipping and logistics, which can be more variable in terms of speed and reliability.
  3. Private Label & Product Expansion: Amazon developed its own private-label products and expanded into diverse categories. They also encouraged third-party sellers to use their platform, ensuring a vast product range.
  4. Ecosystem Development: Amazon diversified its business areas, venturing into hardware (Kindle, Echo), streaming (Amazon Prime Video), cloud services (AWS), and more. This diversification created multiple revenue streams and bolstered its market presence.
  5. Trust and Reliability: Amazon’s emphasis on customer service and consistent delivery times built significant trust with customers. While eBay has made efforts to ensure product authenticity and seller reliability, the peer-to-peer model sometimes leads to inconsistencies in product quality and delivery.
  6. Global Expansion Strategy: Both companies pursued international expansion, but Amazon’s aggressive strategy of setting up localized versions of its site, fulfilment centres, and tailored services for different countries gave it a strong global footprint.
  7. Subscription Model: Amazon Prime, a subscription-based service, not only offers faster delivery but also includes streaming, exclusive deals, and other perks. This has fostered customer loyalty and increased purchase frequency.
  8. Feedback System: While eBay’s feedback system was innovative and built trust in the early days, some argue that it’s become less effective over time due to potential biases and reluctance from buyers and sellers to leave negative feedback.
  9. Acquisitions and Divestitures: While both companies made acquisitions, their strategies differed. Amazon’s acquisitions like Zappos, Whole Foods, and Twitch were integrated into its ecosystem. eBay, on the other hand, made some large acquisitions, such as Skype (see below), which were later divested as they didn’t align with eBay’s core focus.

What can be seen is that eBay seems to have plateaued insofar as the gross merchandise volume (GMV) (i.e. the total amount of ‘stuff’ sold via the platform) is concerned whereas Amazon’s GMV is steadily rising and so is the share of that GMV being sold by third party sellers (rather than Amazon directly) so doubtless they’re eating some of eBay’s lunch.

Perhaps the different share prices reflect the differing optimism because if there’s one thing that investors like, it’s growth.. One thing that’s clear … both companies did well over the pandemic.

While eBay didn’t reach the same dizzying heights of Amazon, it’s nevertheless a true rags-to-riches success-story that’s worth studying, including a couple of their better-known acquisitions. Even if the acquisitions were later sold, it’s interesting to try and appreciate the thinking behind the strategy and synergy.

Payment Provider : X Marks The Spot

The X Factor Elon Musk’s wealth originated from a critical acquisition made by eBay in 2002. In the late 1990s, Musk co-founded, an online payment company. would later become known as PayPal after a series of developments and a merger.

It was this very company, PayPal, that eBay acquired in 2002 for $1.5 billion in stock. At the time of the acquisition, Musk held 11.7% of PayPal shares, translating to roughly $165 million from the sale. Not too shabby for Mr Musk and it certainly helped springboard his wealth to be in the same league as that of Jeff Bezos from Amazon.

Communications Considerations : Skype

In late 2009, eBay finalized the sale of Skype for an impressive $2.75 billion. This strategic move allowed eBay to refocus on its core e-commerce operations, while the deal also highlighted Skype’s significant growth and potential in the telecommunications sector.

The Future?

Whilst Amazon seems intent on taking over the world by expanding relentlessly into eBay’s territory (and many others), eBay will likely remain a trusted corner-of-the-web for people to buy and sell goods for many years to come.

All of which started 28 years ago (this week), with a good idea and a broken laser-pointer.

Featured Article : Subscription Sales Scrutiny

Following the news that US Federal regulators have sued Amazon, alleging that people have been “tricked” into buying hard-to-cancel Prime memberships, we take a closer look at ‘inertia selling’.

What Happened With Amazon Prime Subscriptions? 

Back at the end of June, the US Federal Trade Commission (FTC) announced that it was taking action against Inc, for “enrolling consumers in Amazon Prime without consent and sabotaging their attempts to cancel”. The FTC, which alleged that Amazon had been involved in this kind of inertia selling for years, went so far to say in its complaint that Amazon had been using “manipulative, coercive, or deceptive user-interface designs” which it describes as “dark patterns,” designed to “trick consumers into enrolling in automatically renewing Prime subscriptions.” 

The FTC Chair Lina M. Khan, said in the complaint: “These manipulative tactics harm consumers and law-abiding businesses alike.” 

Denial From Amazon

Amazon issued a statement in response, denying the TFC’s allegations, saying they were “false on the facts and the law” and that “The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership.” 

Inertia Selling 

‘Inertia selling’ is a controversial sales technique which usually applies to a company sending unsolicited goods or services (or a subscription for services) to individuals with the expectation that they will buy or continue to buy the items. The idea is that the inertia of the consumer (i.e., the natural tendency of consumers to avoid taking action and stick with the default option) will mean that they either keep and pay for the item or to continue a subscription service, often without fully understanding the terms and conditions involved.

As the name suggests, this approach relies on the consumer’s inertia to drive sales, rather than obtaining explicit consent or agreement for the transaction.

Making Things Too Difficult 

In the recent complaint against Amazon by the FTC, it was alleged that making the option to purchase items on Amazon without subscribing to Prime was difficult for consumers to locate by not being clear in the transaction that in choosing that option consumers were also agreeing to join Prime for a recurring subscription. Also, the FTC alleged that when consumers tried to cancel Prime membership, they were faced with multiple steps, first having to locate the cancellation flow, and then being redirected to multiple pages that presented several offers to continue the subscription at a discounted price, turn off the auto-renew feature, or to decide not to cancel. The FTC said that only after clicking through these pages could consumers finally cancel the service. In other words, its alleged that consumers may have been tricked into consent in the first place and then the sheer complication of cancellation made consumers give up and opt for keeping the service.

Is It Illegal? 

Although these “dark patterns” (as described by the FTC) sound as though they must be illegal, it’s not quite as clear cut. Inertia selling is generally considered to be an unfair commercial practice under UK law, and it can be illegal. For example, UK consumer protection legislation like the Consumer Protection from Unfair Trading Regulations 2008, is designed to prevent unfair or deceptive practices, including inertia selling. These laws require that businesses provide consumers with clear, truthful information so they can make informed choices.

If a consumer in the UK receives unsolicited goods or services, they generally are under no legal obligation to pay for them. The law typically considers these unsolicited items to be gifts, and the consumer may not be required to return them. Also, companies must not demand payment for items that were not explicitly ordered as doing so could be considered an unfair commercial practice and may result in legal consequences.

However, for the consumer, it’s essential to carefully read the terms and conditions of any contract or agreement entered into, as there can be instances where the business has a legal basis for providing additional goods or services and charging for them. It appears, therefore, these situations can sometimes be nuanced.

Change Is Coming 

Although some areas of these practices may be nuanced, in April in the UK, the government announced that a new Bill will give the Competition and Markets Authority (CMA) new powers to clamp down on “subscription traps.” The changes will also require businesses to give consumers clearer information before they enter a subscription contract, issue a reminder when (for example) a free trial or low-cost introductory offer is coming to an end, and a reminder before a contract auto-renews onto a new term, and give consumers a straightforward way to exit a subscription contract.

In March this year, in the US, the FTC proposed a “click to cancel” provision requiring sellers to make it as easy for consumers to cancel their enrolment as it was to sign up. This change looks likely to help tackle hard-to-stop free trials, and auto-renewals (subscription traps).

In the EU, The CPC Network (coordinated by the European Commission) recently asked Mastercard, VISA and American Express to introduce a series of changes in their rules to ensure that traders provide clear information to consumers on recurrent payments before they enter into a subscription.


Inertia selling is not new but arguably, with the kind of subscription economy we now have, it may be easier for companies to use those practices. It’s worth noting that it’s not just Amazon that allegations of inertia selling of subscriptions have been made about. Other examples (and there are many more than these) include:

– Way back in 2013, when Adobe transitioned to its Creative Cloud subscription service, it received criticism about its subscription-only model and its cancellation policies.

– In 2015, Sky faced an Ofcom investigation for allegedly making it difficult for customers to cancel, e.g. cancellation requests not being “verified” without a call by the customer.

– In 2019, a Guardian newspaper report highlighted many companies which let customers sign up online but required a phone call to leave, e.g. Weight Watchers (WW), Ocado Smart Pass, British Gas Homecare, Which?, and others. The point was that requiring cancellation via phone call could be something that consumers forget.

– In 2020, the CMA took action against Roland for not making it sufficiently easy for online customers to cancel their digital piano rental agreements.

– Three, Vodafone, and EE all came under scrutiny from the CMA in the UK for the terms of their mobile phone contracts, some of which allegedly made it difficult for customers to switch providers or cancel their services.

– As in the US, gym chains in the UK have faced scrutiny for their cancellation policies. The CMA has now taken steps to ensure that gyms are transparent about their terms and conditions.

– In 2021, while the primary concerns with Viagogo (the multinational ticket exchange and ticket resale brand) surrounded ticket reselling, some consumers also complained about subscriptions that were difficult to cancel. This led to investigations and enforcement action by the CMA.

– Last year, as part of its investigation into the online console video gaming sector, the CMA identified concerns about some features of Microsoft’s auto-renewing subscriptions. For example, the CMA was particularly concerned about whether it was clear upfront that contracts would automatically renew, how easy it was to turn off automatic renewal, and whether people may not have realised they were still paying for services they no longer used.

What Does This Mean For Your Business? 

As we have moved more into becoming a subscription society, regulating all the practices has become more complicated. One of the chief concerns is how to protect consumers from business practices that essentially make the barriers to entry of a subscription contact incredibly low (or virtually invisible) and the barriers to exit extremely high through means such as excessive complication – two key characteristics of inertia selling.

In the US, UK, and EU matters such as hard-to-stop free trials, auto-renewals (subscription traps), and making consumers work hard to cancel are all being addressed with new proposed laws and new powers being given to regulators. For businesses offering subscriptions and wanting to avoid penalties, this will mean a review of their subscription process paying particular attention to clarity and options in sign-up and providing an easy way to cancel (with enough reminders along the way). Although Amazon is the latest to come under the regulatory spotlight it is by no means the only company to have been warned or had action taken against it by regulators over how subscriptions are sold, handled, renewed, or cancelled.

Although more legislation is in the pipeline and scrutiny more intense than ever, there is still some way to go in successfully tackling the many practices and nuances related to inertia selling. In the meantime, in the UK, customers who believe they have been the victim of inertia selling can report the practice to the CMA or their local Trading Standards office for further investigation.

Tech News : Seven Safeguarding SamurAI?

Following warnings about threats posed by the rapid growth of AI, the US White House has reported that seven leading AI companies have committed to developing safeguards.

Voluntary Commitments Made 

A recent White House fact sheet has highlighted how, in a bid to manage the risks posed by Artificial Intelligence (AI) and to protect Americans’ rights and safety, President Biden met with and secured voluntary commitments from seven leading AI companies “to help move toward safe, secure, and transparent development of AI technology”. 

The companies who have made the voluntary commitments are Amazon, Anthropic, Google, Inflection, Meta, Microsoft, and OpenAI.

What Commitments? 

In order to improve safety, security, and trust, and to help develop responsible AI, the voluntary commitments from the companies are:

Ensuring Products are Safe Before Introducing Them to the Public

– Internal and external security testing of their AI systems before their release, carried out in part by independent experts, to guard against AI risks like biosecurity and cybersecurity.

– Sharing information across the industry and with governments, civil society, and academia on managing AI risks, e.g. best practices for safety, information on attempts to circumvent safeguards, and technical collaboration.

Building Systems that Put Security First 

– Investing in cybersecurity and insider threat safeguards to protect proprietary and unreleased model weights (regarded as the most essential part of an AI system). The model weights will be released only when intended and when security risks are considered.

– Facilitating third-party discovery and reporting of vulnerabilities in their AI systems, e.g. putting a robust reporting mechanism in place to enable vulnerabilities to be found and fixed quickly.

Earning the Public’s Trust 

– Developing robust technical mechanisms to ensure that users know when content is AI generated, such as a watermarking system, thereby enabling creativity AI while reducing the dangers of fraud and deception.

– Publicly reporting their AI systems’ capabilities, limitations, and areas of appropriate and inappropriate use, covering both security risks and societal risks (e.g. the effects on fairness and bias).

– Prioritising research on the societal risks that AI systems can pose, including those on avoiding harmful bias and discrimination, and protecting privacy.

– Developing and deploying advanced AI systems to help address society’s greatest challenges, e.g. cancer prevention, mitigating climate change, thereby (hopefully) contributing to the prosperity, equality, and security of all.

To Be Able To Spot AI-Generated Content Easily 

One of the key aspects of more obvious issues of risk associated with AI is the fact that people need to be able to definitively tell the difference between real content and AI generated content. This could help mitigate the risk of people falling victim to fraud and scams involving deepfakes or believing misinformation and disinformation spread using AI deepfakes which could have wider political and societal consequences.

One example of how this may be achieved, with the help of the AI companies, is the use of watermarks. This refers to embedding a digital marking in images and videos which is not visible to the human eye but can be read by certain software and algorithms and give information about whether it’s been produced by AI. Watermarks could help in tackling all kinds of issues including passing-off, plagiarism, stopping the spread of false information, tackling cybercrime (scams and fraud), and more.

What Does This Mean For Your Business? 

Although AI is a useful business tool, the rapid growth-rate of AI has outstripped the pace of regulation. This has led to fears about the risks of AI when used to deceive, spread falsehoods, and commit crime (scams and fraud) as well as the bigger threats such as political manipulation, societal destabilisation, and even the existential threat to humanity. This, in-turn, has led to the first stage action. Governments, particularly, need to feel that they can get the lid partially back on the “genie’s bottle” so that they can at least ensure safeguards are built-in early-on to mitigate risks and threats.

The Biden administration getting at least some wide-ranging voluntary commitments from the Big AI companies is, therefore, a start. Given that many of signatories to the open letter calling for 6-month moratorium on systems more powerful that GPT-4 were engineers from those big tech companies, it’s also a sign that more action may not be too far behind. Ideas like watermarking look a likely option and no doubt there’ll be more ideas.

AI is transforming businesses in a positive way although many also fear how the automation it offers could result in big job losses, thereby affecting economies. This early stage is, therefore, the best time to make a real start in building in the right controls and regulations that allow the best aspects of AI to flourish and keep the negative aspects in check, but this complex subject clearly has a long way to run.