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REv: JUNE21,2001

S T E P H E NP . B R A D L E Y

eBayr Inc.

We think Amazonis a aeryserious competitive threat a numberof reasons.First, we think leff Bezos is for veryfocusedon this. This is a aery large ntarketwith rnaigins greaterthan any of Amazon's bttsiiesses. So far he'soery committed coming to aftereBayand I don't blante him. -Bob Kagle, Benchmark Capital It was Monday afternoon and Meg Whitman, eBaypresident and CEO, and her executive team were doing what they had done every Monday and Thursday afternoon since March g0, Igggdiscussing what they should do in light of amazon.com's (Amazon) earlier-than-expectedentrance into the online person-to-personauction arena. eBay was the world's largest and most popular person-to-person trading community on the Internet. Founded ir 1995,eBay pioneered online person-to-persontrading by developl"g u Webbased community in which buyers and sellers were brought together in an effiiient and^ent"ertaining auction format to buy and sell personal items such as antiques, coins, collectibles, computers, memorabilia, stamps, and toys. The eBay servicepermitted selleis to Listitems for sale,buyers to bid on items of interest, and all eBay users to browse through listed items in a fully automated, topically arranged, intuitive and easy-to-useonline service that was available 24 houri a d,ay, seven auyr u week- From inception through February 1999,more than 186 miilion bids had been made o1 the over 50 million items for sale, resulting in more than $g41 million of gross merchandise sold (see Exhibit 1). On a seven-dayaverage,eBay received approximately 800,000 bids per day. It had successfullyworked with the New York City Deparfment of Consurner AffairJinvestigation by introducing a number of new trust and safety initiatives, such as a verified user program, insurance for items not received or received in an .tnsalisfactory condition, and...