This morning’s Observer column…

Regardless of what happens on appeal, these lawsuits, and others like them, are bad news for eBay. It now seems likely that at least some of the jurisdictions in which the company operates will insist that it becomes much more rigorous in policing activity on its site. And that spells trouble for the company’s business model because policing is expensive, and eBay relies on skimming modest fees from billions of transactions run entirely by software with no human intervention. The key to its success is scale – it has 84 million active users, handles more than 500 million auctions every quarter and last year the total value of everything sold on its sites approached $60bn.

Policing is a labour-intensive business, so eBay’s profitability would be drastically impaired if it were compelled to do it on any realistic scale…