TELECOM Digest OnLine - Sorted: How eBay Makes Regulations Disappear

How eBay Makes Regulations Disappear

Monty Solomon (
Sun, 4 Jun 2006 01:30:00 -0400

The New York Times

In quick succession one morning last month, Louisiana state
legislators plowed through a long list of bills, including one to
relocate the motor vehicle commission, another to regulate potentially
abusive lending practices, and yet another that was the handiwork of
eBay, the digital shopping mall that bills itself as "the world's
online marketplace."

EBay had worked overtime to ensure the passage of Senate Bill 642,
which sought to exempt some Internet transactions -- like those that
occur on its Web site -- from Louisiana licensing requirements for
businesses conducting auctions. As the State Senate's Commerce
Committee convened to consider the bill, Duane Cowart, an eBay
lobbyist, testified that forcing eBay "trading assistants" to fork
over $300 for a license was unduly burdensome.

"What they do on the Internet is not an auction, and they are not
auctioneers," Mr. Cowart told the committee. Trading assistants take
items on consignment from other owners and put them up for bid on
eBay, but Mr. Cowart said their activities were more akin to placing
classified ads. Louisiana's senators seemed to agree with him
wholeheartedly. "I think eBay is great," said one, while another
regaled the room about his adventures shopping for a Plymouth Prowler
on eBay. State Senator Noble E. Ellington, a Democrat who sponsored
the bill at Mr. Cowart's behest, beamed as his colleagues gave the
legislation their unanimous support.

EBay's lobbying activities are not confined to Louisiana. As the
company has spread its innovative and influential wings across the
Internet, it has also woven together a muscular and wily lobbying
apparatus that spans 25 states. "It is a fast-moving train, and if you
get in front of it you'll get flattened," said Sherrie Wilks, an
official with Louisiana's licensing agency, who is concerned that eBay
flouts regulatory oversight by persuading state legislators to take
the company's side.

Regulators in other states also say that when they try to erect
guidelines around eBay's activities, they quickly encounter the
realities of the company's political power, raising anew the perennial
questions about the proper balance among public policy, consumer
protection and business interests. EBay's lobbying tactics, meanwhile,
illustrate the spoils to be won when a savvy, resourceful company
combines local political persuasion and grass-roots rallying to get
lucrative regulatory exemptions that allow it to safeguard its

EBay's efforts have been remarkably successful, and the company, which
has worked tirelessly to cultivate its image as a friendly
neighborhood bazaar even as it engages in hard-nosed lobbying, is not
shy about boasting of its victories. Last year, Ohio passed a law that
would have regulated eBay sellers, but the company moved quickly --
with the help of seasoned lobbyists -- to have a pre-emptive and more
favorable bill passed.

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