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Amazon Accused of Poaching, eBay Sues Managers

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Amazon (AMZN) is on the spot due to the way it operates. eBay (EBAY) is suing Amazon workers is the latest tailwind, which threatens the e-commerce giant’s reputation in the multi-billion industry.

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Amazon accused of poaching

Amazon’s managers have been accused of operating an illegal racketeering scheme. Allegedly, the company poached high-value eBay third-party sellers.

eBay filed the lawsuit in October last year. In a new federal lawsuit, eBay provided details about the scope of the alleged racketeering scheme. The scheme underscores the fierce competition for high-value merchants in the highly lucrative market. Statista data indicates that retail e-commerce sales will clock highs of $3.4 trillion in 2019 compared to $2.8 trillion in 2018. eBay’s lawsuit against Amazon workers comes during increased competition for a bigger piece of the trillion-dollar industry.

eBay sues Amazon workers

Court filings indicate that eBay is suing Amazon workers for training employees on how to create fake eBay accounts. Allegedly, Amazon managers created fake eBay member accounts to access eBay’s internal email system.

eBay also said that Amazon employees opened the eBay accounts with no intention of ever using them. eBay claims that the actions violated the user agreement and certain policies. The lawsuit also alleges that Amazon managers trained workers on which merchants to target. The managers allegedly trained the workers on how to come up with external mails.

eBay is suing Sonja Boch, Amanda Sullivan Hedger, and Ernest Arambula—three Amazon managers. The managers targeted specific types of eBay sellers. The focus was mainly on eBay sellers who could fill gaps in Amazon’s online product lineup.

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The Amazon representatives allegedly had seller recruitment quotas that they had to satisfy. eBay’s Amazon workers lawsuit maintains that the trio violated federal racketeering laws. The lawsuit also maintains that their actions harmed eBay’s operations for the sole purpose of bolstering Amazon’s profits.

Amazon said that it operates in a competitive retail market. The company competes for customers with Alibaba (BABA) and eBay. The company faces stiff competition from Walmart (WMT) and Target (TGT). The two brick and mortar retailers are investing vast sums of money in online sales.

Antitrust reviews

The new lawsuit could lead to immense scrutiny on Amazon during the bitter standoff with lawmakers and regulators. The Department of Justice has already opened a broad antitrust review targeting e-commerce giants. Other companies that are part of the broadened antitrust review include Apple, Facebook (FB), and Google (GOOGL).

Facebook is the subject of a record $5 billion fine. The company gave Cambridge Analytica illegally access to more than 80 million users’ private information. Google faces an antitrust probe due to how it operates its search engine and other software including Android, according to The Verge

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Regulatory pressure in the US isn’t Amazon’s only concern. The company is also the subject of an antitrust probe by the European Union. The European Union opened a probe to examine whether the company abuses its role. The probe will focus on how the company operates as an online seller and marketplace operator.

Second-quarter earnings

eBay is suing Amazon workers due to its disappointing second-quarter results. The company reported revenues of $63.4 billion compared to analysts’ expectation of $62.5 billion. The EPS missed analysts’ expectations and came in at $5.22 per share compared to the expectation of $5.57. Amazon Web Services’ revenues also missed analysts’ expectations. The company had revenues of $8.38 billion compared to the expectation of $8.5 billion.

In contrast, eBay reported impressive second-quarter results, which beat analysts’ expectations. The revenues rose 2% to $2.7 billion compared to the analysts’ expectation of $2.68 billion. The net income from continuing operations was $403 million or 46 cents per share.

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