The Online Auction Giant and the Fleas

Talk to just about anyone in the online auction business who isn't EBay and before long the conversation will degenerate into a David versus Goliath metaphor.

UBid, BargainandHaggle.com and BidBay -- I mean, AuctionDiner -- all share the same raison d'etre: to battle EBay.

There's only one problem: EBay doesn't seem to be battling back.

Public Persona

The EBay situation reminds me of a story from my childhood in which a giant was running across a field as flea-sized attackers jumped on his back, his feet, anything they could grab.

The only difference -- and it's a big one: The giant in the story seemed angry. No one has yet been able to evoke a public snarl from Meg Whitman and company.

Maybe EBay is a nasty and vile competitor behind the scenes. Maybe it kicks, bites, scratches and throws kidney punches. But from all outward appearances, EBay is going about its day-to-day affairs in a very methodical and businesslike manner, even when those affairs involve legal entanglements.

Hocus Focus

UBid, to its credit, doesn't cry about EBay's influence and actually seems to be carving out a pretty strong niche for itself. I'm sure, however, that EBay's lawyers are taking a very close look at UBid's decision to call its fixed-price offering "UBuy It Now."

That's just one letter away from EBay's "Buy it Now" and is likely to get UBid and the folks at CMGI (Nasdaq: CMGI) a terse lawyer's letter, if nothing else. EBay has said repeatedly that it will defend its trademarks, after all.

Greasy Spoon

Witness AuctionDiner. The company used to be called BidBay until it settled a copyright infringement suit out of court last week. In so doing, the founder of BidBay tried to take some parting shots at Goliath, tossing around big words like "monopolize."

BidBay only dropped the suit, founder George Tannous said, because it lacked the financial resources to continue fighting it. Tannous, who has never left a bad analogy unturned, predicted AuctionDiner will "rise like the Phoenix" to become the auction alternative. Pretty poetic stuff for a press release.

But also pretty sad. Maybe Tannous should pick up "Don Quixote" next time and learn something about tilting at windmills. EBay isn't getting close enough for BidBay -- or anyone else with limited resources -- to land a good punch.

What? Me Worry?

Why should it? Even more formidable foes like Yahoo! and Amazon have to admit that their own auction forays have been, to date, less successful than they would have liked.

Meanwhile, other little startups are clinging to EBay's shoelaces, like BargainandHaggle.com, whose employees recently engineered a buyout from the venture firm that founded it. Upon relaunch, the site offered free listings.

At the same time, EBay was busy raising fees. That's just the opposite strategy, and that's the point: EBay is going to execute the EBay business plan as best it can, not worry about the puppies nipping at its heels.

EBay has its own goals. Just ask the company's CFO, who told a conference the other day that EBay intends to have US$1 billion operating cash flow by 2005. The auction giant also is busy closing deals in Taiwan, looking for avenues into China and countless other markets.

Every now and then, though, it has to find time to swat away the fleas.

What do you think? Let's talk about it.