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eBay is a successful online auction website, at which people from all around the world buy and sell goods and services.

Millions of collectibles, knickknacks, doodads, appliances, computers, furniture, equipment, vehicles and etceteras are listed, bought and sold daily. Some items are rare and valuable, while many other dusty gizmos would have been discarded if not for the thousands of eager bidders worldwide, who seemingly collect everything. A recent search of eBay uncovered thousands of passe beanie babies and hundreds of vintage Kewpie Dolls. It is fair to say that eBay has revolutionized collectibles markets, by bringing together buyers and sellers internationally in a huge, never-ending yard sale and auction. Large, international companies, such as IBM, sell their newest products and offer services on eBay using competitive auctions and fixed-priced storefronts.

eBay generates revenue from sellers, who pay a two to seven percent premium on each item, and from advertising. It does not handle the goods, nor does it transact the buyer-seller payment, except through its subsidiary PayPal. Instead, much like newspaper want-ads, sellers rely on the buyer's good faith to make payment, and buyers rely on the sellers' good faith to actually deliver the goods intact. To encourage fidelity, eBay maintains, rates and publicly displays the post-transaction feedback from all users, whether they buy or sell. This way, the buyer is encouraged to examine the sellers' feedback profile before bidding to rate their trustworthiness. Sellers with high ratings generally have more bids and garner higher bids.

eBay is headquartered in San Jose, California.

Caveat emptor

eBay has its share of controversy, ranging from its privacy policy (eBay typically turns over user information to law enforcement without a subpoena) to well-publicized seller fraud, though statistically fewer than 1 in 200 transactions fail.

A controversial feature of eBay is known as sniper bidding. eBay auctions are run on a time limit, and the highest bidder at the end of the time limit wins. People take advantage of this by bidding at the last second, before others who may out bid them have a chance to bid again. This practice is controversial because it seems that it could easily be fixed by changing the eBay system to simply extend the time limit for each bid placed. Some critics allege that this is not done because eBay employees themselves use sniper bidding, possibly aided by a proprietary/insiders advantage.

On 28 May 2003 a US District Court federal jury found eBay guilty of patent infringement and ordered the company to pay US$35 million in damages. The jury found for plaintiff MercExchange, which had accused eBay in 2001 of infringing on three patents (two of which are used in eBay's "Buy It Now" feature for fixed-price sales) held by MercExchange founder Tom Woolston.

On 28 July 2003 eBay and its subsidiary PayPal agreed to pay a $10 million fine to settle allegations they aided illegal offshore and online gambling. According to the settlement, PayPal between mid-2000 and November 2002 transmitted money in violation of various US federal and state online gambling laws.

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