eBay's Whitman Addresses Political Issues Affecting E-Commerce

(April 21, 1999) Margaret Whitman, of online auction web site eBay, spoke at the National Press Club on Tuesday, April 20, on a variety of business and political issues affecting e-commerce. She argued that no new regulation of privacy online is necessary.

Margaret Whitman is the President and CEO of the online auction web site, eBay. She traveled to Washington DC to meet with legislators and the press. She spoke at a luncheon at the National Press Club in Washington DC. Her address focused on eBay's business activities. Many of the questions focused on political issues.

The following is extended excerpts from her address, and answers to questions.

Question: "Is there a privacy issue here? Can transactions be tracked to individual users? And, do you still rent your lists to others?

Whitman: "I think that there is a very significant privacy issue on the Internet. And, let me tell you what eBay's policy is. If you go to the home page you can click on a link that says 'Privacy Policy'. And what we then show there is an agreement, or a policy, that talks about how we use the information. And there is also a very easy to use grid that says, 'here is the information that we collect, and here is who can see it'. And eBay actually from the beginning has never used the data that we have about our customers for direct marketing purposes."

"We have a real corporate feeling that our users need to be treated with respect, and that we don't actually think of them wallets, and that direct marketing at eBay is not one of the things that we historically do. Obviously, in the database, there is a tremendous amount of information about purchasing behavior and buying characteristics. But, we have thus far had a policy where we do not release any of that information. We don't use it ourselves, and we don't rent the lists. But, the most important thing about the privacy policy is that there is full disclosure as to what information is collected and to whom that information is available. And, I think that, actually, in many ways it is a model for the Internet in terms of disclosure."

Question: "What do you think is the proper balance between a consumer's desire for privacy, and an e-commerce company's need for information? And how do you convince the consumer of that? And, what do you think of legislation regulating privacy and e-commerce companies?

Whitman: "Well, particularly on eBay, there is some degree of tension between creating a safe, and open environment where individuals know who each other is, and protecting, you know, the privacy of those individuals. And the way we think about it is, information, first of all, is the pulp, the real point of disclosure, you need to know what it is that we are collecting about individuals, and how that is being on eBay.

"Basically, you know, in terms of transaction history, and things like that, as I said, that is something that we do not disclose to anyone. However, to create a safe and open environment, you know, your e-mail address, you can e-mail people on the site. And you can create that beginning of the dialogue. So, it is that balance between total anonymity, and then an open and honest market place, where people know who they are."

"In terms of legislation, we are very interested in following the debate that is happening in Washington on this whole privacy arena. I think it is an area that will increase in importance over the next twelve months, and we are anxious to participate with a variety of individuals. In fact, I was here in Washington meeting with a number of Senators this morning to share our point of view and engage in the dialogue about what the right way is to regulate this, if at all on the Internet."

Question: "Well, what is the right way? And, should it at all be regulated?"

Whitman: "I think our feeling right now is that over the last twelve months the challenge was put to industry to regulate themselves. And I will tell you that the top one hundred web sites on the entire Internet, which account for about for about 85% of the traffic, actually have quite good and quite explicit policies. So, at the moment, I don't actually happen to think that regulation is necessary. As the Internet continues to evolve, and more and more sites come on, we will have to see how that evolves. But, actually, I think that the top one hundred web sites have done an excellent job in the last twelve months in terms of ..... So, I would say that no new regulation is needed right now.

Whitman: "As you know, eBay is an open and honest marketplace. And, there are a variety of products for sale on eBay. We did make the decision in January that we would eliminate the firearms category on eBay, because we just felt that, while there was a huge group of collectors who were interested in antique firearms, it was impossible to distinguish sometimes between firearms that were antique, and, actually, you know, other kinds of weapons. So, we made that decision."

"As we look at other categories, like alcohol, alcohol is available for sale on eBay. There are a tremendous number of regulations associated with that, and we have those regulations out in front on the eBay site. But as we continue to look at this category and understand, you know, user behavior, and understanding whether or not this is an appropriate category for online trading. You know, we are trying to evaluate that, working with our community members to try to understand whether this is something that we, you know, continue to have as a category."

"It is less than one tenth of one percent of eBay's total sales. So, the answer is, so far it has worked out OK, but it is a category that we are keeping our eyes on."

Whitman: "We face a very interesting challenge as we try to take eBay overseas. Some of you may know, we have a U.K. home page, and we have a Canadian home page. We now can search by country. You can list an item in your own currency, and you can view an item in your own currency. And we anticipate expansion very rapidly across the EU. And there are a number of different challenges here. Every country has their own data collection rules, their own privacy rules, their own libel laws. And as we go from country to country, we trying to understand those laws, and make sense of whether this is a venue that eBay can be successful in."

"And thus far we think we can work within the variety of different regulations that exist in these countries. But as the EU begins to evolve and really cements as truly an economic unit, we will, I am sure, have to adapt, eBay service, as we head out through Europe. And I can tell you that Asia has a whole other set of challenges, that are entirely different from those in Europe."

Question: "Are eBay transactions tax free, and if so, should they be?" 

Whitman: "The tax situation is, of course, our sellers and buyers, if they are located in the same state, the seller is obligated to collect sales tax from that buyer. And we are certain that our larger sellers in fact do that because they are running small businesses and collect those sales taxes. So the so called three year moratorium on sales taxes is actually not about sales tax not being collected by these Internet retailers. The issue of course is the fear that if a lot of transactions go on to the Internet, and you know, you are selling out of San Francisco, California, to states all over the world, states all over the United States, then in fact that is where sales tax is not applicable."

"My view on this is that a three year moratorium on new taxes on the Internet is actually very important because it has allowed this medium to nurture itself, to gain momentum, and to gain steam. So, right now, I actually think we need to enforce the tax laws that are on the books. Our sellers should collect taxes. We have notification on the site that they should collect local and state sales taxes. But, that right now, this is not the time to impose new taxes on this medium, because I think it needs a little more time to grow and get established and be nurtured."

Whitman: "The online industry is facing a number of challenges in the years ahead. Yet, there has been an increase in the number of fraud cases reported to authorities involving e-commerce. That is why eBay is a pioneer in trust and safety programs that are designed to educate our users and enhance their trading experiences. As a result of eBay's dedicate to developing a safe, open, and honest market place, we are actively working with consumer advocacy groups and law enforcement agencies in a public private partnership that is designed to provide the safest trading environment on the Internet."

"Our feedback forum gives bidders the opportunity to learn about the trading history of each seller. Earlier this year we arranged with Lloyd's of London to provide free insurance to eBay users. And, we were the first to offer a third party escrow for more expensive items. And just this month, we inaugurated authentication purchases for coins and sports memorabilia."

"In addition, eBay has always worked with the owners of intellectual property rights. The evolution of this commitment is what we call our 'legal buddy program.' To date we have partnered with over two hundred content owners and law enforcement agencies in the fight against counterfeit and infringing items that occasionally appear on eBay site. ... All of these safety nets are part of an overall way that the eBay community is creating on its own, to self police, and continue to make the eBay community safe."