Whitman's eBay Legacy Could Help, Haunt Bid - Page 2

Former eBay CEO Meg Whitman Source: Reuters

"Meg was very popular for a long time among eBay sellers because she was running the company in a way that let them make money in ways that they otherwise wouldn't have been able to," Steiner told InternetNews.com.

"That's shifted, because each year they've increased fees, and it became more difficult to sell on eBay and make a profit."

Nevertheless, Whitman will be able to trade on the innumerable success stories of individual sellers who, thanks to eBay, had an opportunity to go into business for themselves. But with many sellers in open revolt over increasing fees and restrictions on eBay's marketplace, Whitman will not be able to count on the goodwill of the entire online auction community.

"A lot of the sellers would argue that eBay ultimately failed them. The eBay of 2005 is long gone," Steiner said.

Whitman spokesman Henry Gomez declined to comment on any potential trouble spots from her career at eBay.

"We're confident that once Californians look at Meg's background, her success at creating jobs, and most of all, her positions on key issues, she'll be a very strong candidate," he told InternetNews.com.

But tying Whitman's political image to her tenure at eBay could have some other political ramifications. The free-wheeling auction process that characterized eBay's early years has given rise to allegations of widespread fraud, bringing the site under fire from industry groups, such as the Software Information and Industry Association, which has threatened suit against eBay and sued many dozens of sellers for copyright infringement.

eBay has numerous policies in place to deter fraud, but has claimed in several court cases that it is not responsible for policing its site for fakes. This stance has drawn the ire of groups working to curb the trade of counterfeit and pirated goods, and, presumably, the police trying to bring fraudsters to justice.

Still, Whitman may have bought herself some goodwill with the law enforcement community last year, when she contributed $250,000 to a committee working to defeat California Proposition 5, which favored treatment programs over incarceration for drug offenders.

Whitman, who by Steiner's account had "few scandals" to mar her name, might have to answer questions over alleged improprieties dating back to the late '90s.

The issue was stock spinning, a now-illegal practice where an investment bank offered its preferred clients a sweetheart deal in the form of an early buy-in to shares of a company it is about to take public. A suit brought by eBay shareholders alleged that Whitman and other executives had cashed in on pre-IPO shares of several tech companies between 1999 and 2001, thanks to Goldman Sachs, the investment bank that took eBay public in 1998, and at the time counted Whitman as a board member.

The plaintiffs argued that all of eBay's shareholders -- not just the top executives -- should have benefited from the windfall from the pre-market shares.

The parties reached a settlement in 2005, in which Whitman, eBay founder Pierre Omidyar and Jeffrey Skoll, the company's former president, agreed to pay $3 million back to the shareholders.

Whitman and the others didn't have to admit any wrongdoing as part of the settlement, and spinning was legal at the time. But that doesn't mean the issue won't resurface in the California campaign, Steiner said. All's fair in love, war and politics, after all.