Full Description

eBay Inc. (eBay), incorporated in May 1996, provides online marketplaces for the sale of goods and services, as well as other online commerce, or ecommerce, platforms, online payments services and online communications offerings to a diverse community of individuals and businesses. The Company has three business segments: Marketplaces, Payments and Communications. Its Marketplaces segment provides the infrastructure to enable global online commerce through a variety of platforms, including the traditional eBay.com platform and eBay’s other online platforms, such as classifieds businesses, secondary tickets marketplace (StubHub), online shopping comparison Website (Shopping.com), apartment listing service platform (Rent.com), as well as its fixed price media marketplace (Half.com). eBay’s Payments segment comprises its online payment solutions PayPal and Bill Me Later. Its Communications segment, which consists of Skype Technologies S.A. (Skype), enables voice over Internet protocol (VoIP) calls between Skype users, and provides connectivity to traditional fixed-line and mobile telephones. In November 2008, eBay acquired Bill Me Later. In October 2009, the Company sold its 65% interest in online phone company, Skype Technologies, to Silver Lake Partners III.

Marketplaces

The Company’s Marketplaces segment consists of online commerce platforms that enable a global community of buyers and sellers to interact and trade with one another. eBay’s Marketplaces platforms seek to bring buyers and sellers together through automated online Websites that are available round the clock. The platforms include software tools and services, some available at no charge and others for a fee, that allow buyers and sellers to trade with one another. The Marketplaces platforms consist of its core online commerce platform, eBay.com and its localized counterparts, and adjacent platforms consisting of the Company’s classifieds Websites, as well as StubHub, Shopping.com, Half.com and Rent.com. eBay’s Marketplaces platforms earn revenue from, as the case may be, listing, feature, subscription and final value fees paid by sellers, lead referral fees, transaction fees and advertising fees.

eBay’s Marketplaces core platform, eBay.com, includes its traditional auction-style format and fixed-price format and has a global presence in 39 markets. During the year ended December 31, 2008, the Company’s auction-style listing format accounted for approximately 55% of its gross merchandise volume. The Company’s fixed-price listing format accounted for the remaining 45% of its gross merchandise volume in 2008. Its traditional auction-style format allows a seller to select a minimum price for opening bids, with the option to set a reserve price for the item, which is the minimum price, at which the seller is willing to sell the item. A seller with appropriate feedback ratings can also sell in a Multiple Item Auction format, which allows a seller to sell multiple identical items to the highest bidders.

The Company’s fixed-price format allows buyers and sellers to accelerate the transaction process rather than waiting for the auction period to expire. Sellers with appropriate feedback ratings are allowed to name a price at the time the item is listed at which they would be willing to sell the item to a buyer. Its Half.com subsidiary also provides a fixed-price, person-to-person online commerce platform that allows people to buy and sell new and previously owned books, movies, music and games at discounted prices. In addition, eBay Stores enables sellers to exhibit all of their listings in one place on its eBay platform, and to describe their respective businesses through customized pages. eBay Stores provides sellers with tools to build, manage, promote and track their businesses. Store Inventory Format listings allow sellers to list items for a minimum 30-day listing period at a lower insertion fee and higher final value fee than regular auction-style and fixed-price listings. As of December 31, 2008, there were approximately 516,000 online storefronts established by users in locations around the world.

eBay offers a range of services for buyers and sellers, which include Feedback Forum, SafeHarbor Program, Verified Rights Owner (VeRO) Program, Customer Support, Value-Added Tools and Services, PowerSeller program, Top buyer program, Coupons and Buyer Rewards and Best Match. Other Marketplaces platforms and services include StubHub, Classifieds Websites, Online Advertising and Other Services, Shopping.com and Rent.com. StubHub is a United States ticket marketplace that enables fans to buy and sell tickets to a selection of sporting, concert, theater and other live entertainment events. The Company’s classifieds Websites are available in hundreds of cities and regions around the world, and are designed to help people meet, share ideas and trade on a local level. Its classifieds Websites include Kijiji, Den Bla Avis, Gumtree.com, LoQUo.com, OpusForum, Marktplaats.nl and mobile.de. eBay works with its partners in a variety of areas, such as online advertising, mailing and other services, that allows the Company to extend the monetization of its platforms and user base. Shopping.com is a comparison shopping destination featuring products from thousands of merchants across the Internet. Rent.com is a United States listing Website in the rental housing industry.

Payments

The Company’s PayPal enables individual or business to send and receive payments online in approximately 190 markets worldwide. eBay’s PayPal enables buyers to pay merchants without sharing sensitive financial information. To make payments, buyers need to disclose only their email addresses to recipients. Buyers also benefit from PayPal’s Buyer Protection Program, which reimburses buyers using PayPal with respect to most purchases made on eBay.com. When using Bill Me Later to obtain transactional credit, buyers need to provide only their name, address, birth date and the last four digits of their social security number. Bill Me Later also offers United States buyers an opportunity to defer payments, and under some promotional arrangements with select merchants, interest on such payments can be deferred for as long as 3 to 6 months.

PayPal offers online merchants an all-in-one payment processing solution, and enables merchants to conduct business with approximately 68.6 million PayPal registered active accounts in approximately 190 markets. In addition, PayPal also offers a payment gateway service that provides merchants who already have a credit card merchant account with a secure connection from their online store to their Internet merchant account and their payment processing network. A merchant can generally open a PayPal account and begin accepting credit card payments within a few minutes. Most merchants are approved instantly for a PayPal account, and do not need to provide a personal guaranty, acquire any specialized hardware, prepare an application, contact a payment gateway or securely store customer financial information that is maintained by PayPal instead of the merchant. United States merchants offering Bill Me Later provides buyers with various transactional credit arrangements at the point of sale. PayPal offers three types of accounts: Personal, Business and Premier. Buyers make payments at the PayPal Website, at the eBay.com Website, or at the Websites of merchants that have integrated PayPal’s Website Payments or Express Checkout features.

Bill Me Later offers United States online consumers a way to obtain instant credit at the point of transaction. Bill Me Later is not a chartered financial institution, and relies on CIT Bank to extend credit to Bill Me Later customers with the Bill Me Later service. When a consumer makes a purchase using the Bill Me Later service, CIT Bank funds the consumer loan at the point of sale and advances funds to the merchant. Bill Me Later subsequently purchases the receivable related to the consumer loan extended by CIT Bank.

Bill Me Later accounts are most commonly opened on a United States merchant site offering Bill Me Later as a payment method, but can also be opened at the Bill Me Later Website. A buyer enters his or her birth date and the last four digits of his or her social security number and, if approved, Bill Me Later opens an account for the buyer. This account can be used on any other United States merchant site offering the Bill Me Later payment option. Once established, customers can then manage their accounts online with access to their transaction history and monthly statements and can elect to establish recurring electronic monthly payments. Bill Me Later earns the majority of its revenues by collecting interest on the outstanding customer balances and collecting late fees, as well as transaction fees from merchants. The Bill Me Later payment solution is available on the Websites of more than 1,000 online stores, catalogs and travel partners, including Borders, Blue Nile, Bluefly, Continental Airlines, eLUXURY, Fujitsu, JetBlue, Overstock, QVC, Toshiba, Toys “R” Us, U.S. Airways, Walmart.com and Zappos.

Communications

eBay’s Communications segment comprises Skype. Skype offers ways for people around the world to stay in touch over the Internet through free voice and video calls, sending instant messages, short message service (SMS) (text messaging) or files, and by making low-cost calls to landline and mobile numbers. Skype generates revenue through its premium offerings, such as calls made to and from landline and mobile phones, voicemail, call forwarding, and SMS. Skype users can also purchase a variety of flat rate subscriptions for regional and international calling to landlines in many different countries.