eBay Search Manipulation?

More than a few Legal Eagles readers have sent in emails concerning “search manipulation” and how it may relate to the Windsor/Jewelry Auctions legal action against eBay.

eBay offers the following information on its site as it pertains to search manipulation:

Access and Interference:
interfere or attempt to interfere with the proper working of the sites or any activities conducted on the sites.

Statement #1
“Members are not permitted to engage in any activity for the purpose of inappropriately gaining attention or diverting members to a listing. This includes any activity that harms the shopping experience by making it difficult for buyers to find the items they are looking for. Ultimately, it is the seller’s responsibility to ensure that each listing accurately reflects the item being sold, while not using any unfair methods to divert members to their listing. This includes, but is not limited to, a listing’s title, subtitle, item specifics, description, pictures, links, and meta tags.”

Activities that are not permitted include the following - while this list is fairly extensive, we’ll focus on the one “catch all” statement, which stands out within eBay’s policy:

“Any other activity that eBay deems as inappropriately diverting members to a listing or harming the finding experience for buyers.” 

Specific BUZZ words that catch the readers attention abound within statement #1. eBay specifically uses the term “members” in statement #1, which implies that this statement is applicable to ALL eBay members. eBay specifically states:

Members are not permitted to engage in any activity for the purpose of inappropriately gaining attention or diverting members to a listing…

Let’s study the aforementioned excerpt and how it may pertain to Windsor’s claims:

If members (buyers and sellers alike) are NOT permitted to engage in an activity for the purpose of inappropriately gaining attention or diverting members to a listing, then it stands to reason that if a “tool” was utilized to stagger end times on Live auction listings, which subsequently placed those listings at the forefront of eBay core – on an hourly basis – for up to twelve hours, does this “activity” violate eBay policy?

The “forced” placement of live auction listings to the forefront of eBay core, via the manipulation of a the auction end time option/tool - may be in violation of eBay’s own policies, as they pertain to eBay’s policy concerning ”Browse & Search Manipulation”.  eBay states it’s “unfair” to divert attention to a listing and goes as far as to state that their policy includes, but is not limited to, a listing’s title, subtitle, item specifics, description, pictures, links, and meta tags. In this case, while the manipulation of eBay search via an eBay Live Auction seller is NOT specifically stated within their guidelines, is such a statement applicable in ALL sellers? In other words, are (or were) eBay Live Auction sellers exempt from eBay’s own “Browse and Search Manipulation” policy?

eBay states the following within one of their many on-line tutorials:

“eBay believes in a level playing field. As a result, the consequence guidelines are the same for both large and small sellers. The number of violations that will lead to eBay taking action against an account is the same for any type of seller”.

“eBay believes that all sellers should have the same consequences applied independent of sales volume. If a driver is stopped by a policeman for speeding, the driver receives a ticket whether the driver clocks 5,000 or 40,000 miles per year”.

According to TeraPeak, Paramount and Jewelry-Overstock raked in (approximately) $2,000,000.00 in gross sales in the last quarter of 2007. Paramount/Overstock own two eBay user names and also traded under an additional eBay user name via their General Manager within the same parent firm Hillstreet Jewelers. Molayem holds a minimum of two eBay live auctions per day and sometimes held up to four or five auctions per day - during holiday and peak buying periods.

How it Happened…

Molayem utilizes the end time duration tool to force his listings to appear at the front eBay core – every hour on the hour. However, ALL other live auction sellers (with the exception of another jewelry seller known as Neiman’s Jewelers – we’ll get to them shortly) are all sitting many, many pages deep behind Molayem’s listings – why you may ask? No one was informed that the auction time duration had a dual use. In other words, the “tool” was an option in which eBay live auction sellers could select the duration of their auction. If an eBay live auction seller was to hold a six-hour live auction event, they would select a six-hour duration for their auction. However, Molayem also used the auction duration option as a “tool” in which to stagger end times on his eBay live auction items/lots.

At some point and time, a company known as Neiman’s Jewelers (who was selling on the eBay live auction platform) realizes that Molayem has achieved what eBay claims it could not remedy (according to the Plaintiffs complaint) and they also begin to use the “option” as a “tool” in order to force their listings to the forefront of eBay core (how Neiman’s receives assistance in the use of the tool is whole other story). However, out of the hundreds of eBay direct and Live Auctioneers sellers, no one else on the platform appears to have had knowledge that the auction duration option (located within their Catalog Management Set-Up page) could also be used as a “tool”. If everyone knew, the results could be devastating, as eBay live auction lots would “flood” regular eBay core.

eBay representatives learn from Windsor (on October 29, 2007) how Molayem has been able to force his listings to the front of eBay core (every hour on the hour). The communication takes place between Quincy Carroll and the CEO of Windsor. The call is made to Carroll from the parking lot of Molayem’s base of operations in Commerce, California. At the end of that telephone communication, Quincy Carroll requests an email detailing what Windsor has learned and that email is sent to Mr. Carroll within 48 hours.

In the meantime, Windsor also contacts Live Auctioneers and passes on the same information requested by Carroll to Live Auctioneers representatives, including John Ralston COO of Live Auctioneers.

Why did Windsor undertake the expense to fly from Tampa, Florida to Commerce, California to speak with Molayem? After Windsor repeatedly brought up the subject of end times NOT being displayed correctly on their listings through telephone and email communication (for an extended period time), they finally receive an email from Quincy Carroll on October 16, 2007 (or thereabouts) stating that eBay live auctions is dynamic and the end times are a moving target. In essence, the email informs Windsor that eBay “has nothing on the road-map to repair the problem”.

Fed up with eBay’s lack of help and support (and knowing that the “fix” to the problem was apparent through Molayem’s unfettered use of some type of “fix”), Windsor takes it upon itself to visit the ONE eBay live auction seller who has the ability to flow all of his live auction items through the FRONT of eBay core on a staggered hourly basis. Molayem offers up the information and the information is IMMEDIATELY passed onto Quincy Carroll at eBay live auctions by Windsor.

In response, Mr. Carroll writes an email to Windsor suggesting that they join the eBay Developer’s Program. Windsor sends back another email to Mr. Carroll clarifying the situation and that there’s no need for Windsor to join the eBay Developer Program, as the “fix” was apparently in place a long time ago but, NOT disclosed to the plaintiffs.

Mr. Carroll then copies Windsor on his email to John Ralston at Live Auctioneers, in which Mr. Carroll questions why Live Auctioneers did not build the end time “tool” option into their own interface. It is not known how Live Auctioneers responds to Mr. Carroll’s inquiry. It should be noted that Windsor becomes a direct to eBay client, as Live Auctioneers cancels their agreement.

In November, Live Auctioneers agrees (and conducts) two test auctions for Windsor and also conducts its own “eBay Live Test Auctions”. Live Auctioneers then places a notice on their site that Live Auctioneers and eBay are testing the viability of the “tool” (which has been in operation for close to two years – if not longer) and that “when and if” a tool becomes available, Live Auctioneers will offer it to their 700+ clients. The tool is never mentioned again and while viability tests were conducted using the Windsor Auctions account (and Live Auctioneers own test accounts), no mention of the tool and its viability is ever posted on Live Auctioneers Blog in the future.

However, to this very day, Molayem uses the tool to push his listings to the front of eBay core on a staggered end time basis.

Why not just turn the “tool” off and level the playing field? Why not inform Molayem that utilizing such a “tool” may violate eBay’s Search and Manipulation policy? Did the tool violate eBay’s Search and Manipulation policy? Why not automate the tool and/or, at the very least, inform all eBay live auction sellers on how to use the tool manually (until it was automated)? Why is there no reference on how the auction end time duration option has a dual use anywhere on eBay’s site or, on the eBay Live Auction web site? Why are there NO Help sections on how to use the tool on any of eBay’s sites? Why did eBay NOT make an official announcement within their own site(s) as to the use of this tool or even that it existed? Why did NOT one eBay or Live Auctioneers client ever receive (as far as anyone knows) an email, newsletter or addedum, to their eBay Live Auctions Instructional Manual, as to the existence of the tool? Why did eBay allow the tool to be used - even after it was brought to their attention by Windsor in October of 2007 first, through direct communication to Carroll and then through the filing of a lawsuit?.

What we do know is that Windsor FedEx’s packages to Bill Cobb, Adam Sand and Meg Whitman laying out who’s using the tool and how the tool was used on their own platform to gain an unfair competitive edge. However, before those packages of information are shipped, Windsor receives an email from Quincy Carroll asking if there’s anything that can be done before the situation is escalated to the next level. Windsor asked that the tool be shut down and/or that it be offered up to ALL eBay Live Auction sellers. One would think this was a simple request. eBay’s response? None.

All of the aforementioned questions deserve and/or demand answers, as the stakes are quite high as eBay Live Auctions comes to a close in December.