eBay’s transformation into a marketplace was a success story for wallets and eyeballs

Online selling and buying was still an idea that was relatively new. Bill Gates circulated a memo to Microsoft in May 1995 stating that the internet was Microsoft’s top priority. Jeff Bezos, an ex-investment banker, launched Amazon.com in July. It claimed to be the “largest bookstore on Earth”. Netscape, the creator of the most widely used web browser, launched its initial public offering (IPO) in July. The company was valued at almost $3bn by the end of its first day of trading – even though it was unprofitable. Wall Street was paying close attention. The dot-com bubble was beginning to burst. “Wallets and eyeballs”: How eBay transformed the internet into an online marketplace – The reality was far more disappointing than the dreams that the internet of 1995 gave rise to. Although the internet was attracting millions of people – nearly 45 million in 1995, an increase of 76% over the previous year – it wasn’t very user-friendly. It was difficult to find content. You could either wander from one site and then go to the next by following the hyperlinks or by browsing the Yahoo! directory, which was the most popular web portal prior the advent of the search engine. There wasn’t much content available: there were only 23,500 websites in 1995, as opposed to 17m five-years later. The majority of sites that did exist were incredibly inaccessible and difficult to use.

The early web’s small size and slow pace gave it a certain charm. Despite the fact that there was very little to do, people were eager to be there. People created homepages to simply say hello, post photos of their pets, and share their love for Star Trek. They wanted to make connections. This was a form of online living that Omidyar loved. Omidyar had been an avid user of the internet from his undergraduate days and was a member of its many communities. With concern, he now watched the dot-com boom. He later revealed to a journalist that the corporations who climbed on to the internet viewed people as “wallets” and “eyeballs”. Their attempts at commercialization were not only crude and uncool but they also promoted zombie-like passivity (look here, click here, enter credit card number) – which he said threatened the participatory nature the internet. Omidyar later said that he wanted to do something new, and “to give individuals the power to be producers as well as consumers.” That was his motivation for the website he created in September 1995. It was called Auction Web. Auction Web was a marketplace where anyone could list a product for sale. Anyone could also place a bid and the item was awarded to the highest bidder. It would be an ideal market just like the one you’d find in an economics textbook. The miracle of competition would allow supply and demand to meet in order to determine the true price for a commodity. Perfect markets require that everyone has the same information. Auction Web promises this. All information was available for everyone to see.

EBay was one the first major internet companies. It was profitable quickly, grew to be a major of the dotcom era, survived and is still one of the most important e-commerce companies in the world. What makes eBay so interesting is the way it was able to anticipate many of the features that would become the platform. Ebay was not just a place for collectors to trade rare Beanie Babies late at night. It was also a pivotal moment in the history and evolution of the internet. Omidyar’s website was the first to provide the fundamental elements that would allow Google, Facebook and other tech giants to “platformism” the internet. Although none of the metaphors that we use to describe the internet are perfected, “platform” is one of the most important. The original meaning of the term was technical: it meant something developers could build applications on, such as an operating system. The term has been used to describe a variety of software that runs online, especially those developed by the biggest tech companies. Tarleton Gillespie, a scholar, argued that the shift in the usage of “platform” is strategic. Companies such as Google, which call their services “platforms”, can project an air of openness and neutrality. They could be seen as facilitating other people’s interactions, or they can play a supporting role. They have no control over digital spaces and are not actively involved in arranging them. “Platform” doesn’t mean that it isn’t precise. It is intended to confuse rather than clarify.

The stack is a more useful metaphor to understand the internet and one that has been used by its creators from the beginning. A stack is a collection of layers that are stacked on top of each other. Imagine a house with the basement, first, second, and third floors. The roof is the top. Many things you do higher up in a house are dependent on systems further down. A basement water heater heats the cold water piped into your home and pipes it to your bathroom. Internet also has a basement. It is mainly made up of pipes. These pipes are responsible for data transmission, and all other activities higher up on the stack depend on them. The sites and apps are located at the top of this stack. Here is how we see the internet through our screens and in email, tweets, or streams. Understanding these apps and sites – which tech companies refer to as “platforms” by understanding them in the context of the wider story of internet privatisation is the best way to comprehend what happens.