View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
April 10, 2015

eBay, PayPal agree to stay friendly post split

Split planned for later this year.

By CBR Staff Writer

eBay and PayPal have signed an agreement which prohibits them from competing against each other in their core businesses ahead of their split.

The five-year operating agreement is aimed at ensuring both companies are healthy after the split and will continue to take advantage of existing synergies. It also has a one-year transition period.

An updated Form 10 to this effect was filed by PayPal Holdings with the Securities and Exchange Commission (SEC) recently with detailed information on the partnership and prospective financial impact of the agreements between the two companies.

The agreement will facilitate maximum freedom to both companies in a sense that PayPal will be free to pursue new markets and eBay can tie up with alternative payment providers.

However this is not applicable during the term of the agreement. So, PayPal cannot create its own marketplace for physical goods, while eBay cannot create its own payments system on the core eBay platform.

Both companies need to maintain service level agreements to ensure seamless separation as well as continue to share data in key areas for the benefit of customers as well as risk, trust and fraud programmes.

eBay has also detailed additional information about the post-separation leadership of both companies in the filing.

Content from our partners
Unlocking growth through hybrid cloud: 5 key takeaways
How businesses can safeguard themselves on the cyber frontline
How hackers’ tactics are evolving in an increasingly complex landscape

eBay CEO John Donahoe came under increasing pressure from activist investor Carl Icahn in 2014 to split the company into two payments business, PayPal, and legacy e-commerce marketplace, eBay.

Initially Donahoe and the eBay board put up a successful fight to resist the split, but a few months down the line did a complete U-turn during the company’s annual strategic review.

Commenting on the move, Donahoe said in a statement as cited in "Very consciously we didn’t make a reactive decision in Q1 based on a short term event like a proxy fight because we have a long history of being thoughtful and deliberate of how do we set this business up to succeed over the long term.

"From the beginning, Pierre Omidyar, our founder, has a deep commitment to the long term. … And this process has gone through what is the best way to help eBay and PayPal succeed over the long term. I feel confident this is the right direction and that’s the reason we’re pursuing it."

eBay acquired PayPal for $1.5bn in 2002. They are on track to split in the second half of this year.

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.