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08/25/2005 Archived Entry: "Who killed PayPal"
RADLEY BALKO RELATES A SAD BUT INSTRUCTIVE TALE about how government regulators (aided by negative media and lawsuits from competitors, among other factors) destroyed a promising (and very libertarian) product concept and turned it to more "acceptable," but hardly freedom-enhancing, purposes:
PayPalís story is a sad but instructive lesson in how this country treats its entrepreneurs. PayPal is huge and growing. With eBay branding, it now boasts 73 million users, making it by far the largest online payment service. But itís nothing like what it was intended to be: a way for people to protect the money they earn from greedy governments and protect private purchases from the prying eyes of regulators. Greedy governments and prying regulators saw to that. The company sold out to eBay not because eBay beat it in the marketplace, not because eBay offered a better product, and not to reap a financial windfall for PayPal employees. PayPal sold out because, after the beating it took from those claiming to represent the interests of consumers, selling itself was the only way to keep the company alive. Exactly how consumers benefited from that isnít clear.
Balko's article is a reflection on the book The PayPal Wars: Battles with eBay, the Media, the Mafia, and the Rest of Planet Earth by Eric M. Jackson, who saw PayPal's struggles from the inside.
This is not just about PayPal, but about how business is done -- and innovation quashed -- in an increasingly fascistic (in the economic sense) business climate and in a security state that is terrified that anyone might conduct private business privately. The book, which I haven't read, apparently sees PayPal as the victor in its battles -- because it is, after all, now the 800-lb. gorilla of online payment methods. Balko doesn't think so.
Posted by Claire @ 11:49 AM CST