Sun, 21 Oct 2001 13:13:01 -0700
Jim Whitehead writes:
> While PayPal is probably close to achieving network effects lock-in, they're
> not there yet. There are two major vulnerabilities to their business: EBay's
> rival billpoint service, and the credit card companies. Since much of
> PayPal volume right now is EBay transactions, EBay pulling the plug would be
> a big blow.
I think the huge proportion of PayPal business which comes through EBay
can be viewed as a sign of strength rather than weakness. After all,
EBay pushes its own service, BillPoint, and (most?) users still prefer
To actually "pull the plug" on PayPal would require draconian steps --
like banning the mention of PayPal in listings, or requiring all
payments to go through an EBay clearinghouse regardless of individual
EBay has a lot of power to impose such changes things, no doubt, but
to do so would be tinkering with the formula that's worked well for them
so far, and could generate unwanted antitrust attention and liabilities.