Efficiency-inducing Parasites

Baris has an interesting post about Jonathan Miller’s declaration that AOL will aim to be more third-party friendly, and the contrast this declaration has with a few recent developments, including:

Baris has a good point that these third party services, in the interest of empowering the consumer, are actually developing a parasitic relationship with the services they interact with, stealing their traffic and converting it to ad revenue, sort of an arbitrage model.

He asks where the line can be drawn.  I suggest it’s the consumer’s choice.

eBay is in the business of creating a trusted marketplace. It offers its own reputation service.  This puts the new eBay seller at a disadvantage.  If she has invested in a strong reputation elsewhere, she should be able to use it on eBay.  In the most extreme case, eBay can demand an additional fee if she’d rather use her RapLeaf reputation instead of the eBay reputation.

Instead, eBay has banned RapLeaf.  Markets want to be more efficient, not less.  eBay, which has generally been a wise enemy of transaction friction, has chosen to dam the market force with their (still) monopolistic power.  In the long run, it’s not sustainable.

If anything, the move validates RapLeaf‘s value to the marketplace.  Congratulations, Auren!

One thought on “Efficiency-inducing Parasites

  1. Thanks Cem. eBay is a great company. but they are intent on hurting their customers by not giving them a choice. in the last few months we’ve seen hundreds of eBay power-sellers diversify their sales channel and move aggressively to selling outside of eBay. they are moving to more open platforms (like their own web page, Edgeio, craigslist, and more). this mass migration is great for companies like Rapleaf but it is worrisome for sellers and buyers who have invested a reputation on eBay.

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