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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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                                  FORM 10-K/A
                                AMENDMENT NO. 1

(Mark One)
[X] Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
    1934 for the fiscal year ended Annual December 31, 1999.

                                      OR

[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934 for the Transition Period from _________ to _________.

                       Commission File Number 000-24821

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                                   eBay Inc.
            (Exact name of registrant as specified in its charter)



             Delaware                                    77-0430924
   (State or Other Jurisdiction                       (I.R.S. Employer
  of Incorporation or Organization)                 Identification Number)


                   2145 Hamilton Avenue, San Jose, CA 95125
         (Address of Principal Executive Offices, Including Zip Code)

                                (408) 558-7400
             (Registrant's Telephone Number, Including Area Code)

        Securities registered under Section 12(b) of the Exchange Act:

                                     None

        Securities registered under Section 12(g) of the Exchange Act:

                        Common Stock, $0.001 par value

                               ----------------

     Indicate by check mark whether the registrant: (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

     As of March 1, 2000 there were 130,182,905 shares of the Registrant's
Common Stock, $0.001 par value, outstanding, which is the only class of common
or voting stock of the registrant issued as of that date. The aggregate market
value of the voting stock held by non-affiliates computed by reference to the
closing price for the Common Stock as quoted by the Nasdaq Stock Market as of
March 1, 2000 was approximately $7,711,442,000.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Items 10 through 13 are incorporated by reference to the Company's Proxy
Statement for the 2000 annual meeting of shareholders to be filed by May 1st,
2000.

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                                    PART I

Item 1: Business

     This Annual Report on Form 10-K contains forward-looking statements based
on our current expectations about our company and our industry. You can identify
these forward-looking statements when you see us using words such as "expect,"
"anticipate," "estimate" and other similar expressions. These forward-looking
statements involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of the factors described in the "Risk Factors" section of Management's
Discussion and Analysis of Financial Condition and Results of Operations and
elsewhere in this report. We undertake no obligation to publicly update any
forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.

The Company

     eBay Inc. ("eBay" or the "Company") is the world's largest and most popular
personal trading community on the Internet, based on the value of goods traded
on the eBay service.

     eBay, was formed as a sole proprietorship in September 1995, incorporated
in California in May 1996 and reincorporated in Delaware in April 1998. eBay
pioneered online personal trading by developing a Web-based community in which
buyers and sellers are brought together in an efficient and entertaining format
to buy and sell items such as automobiles, collectibles, high-end or premium art
items, jewelry, consumer electronics and a host of practical and miscellaneous
items. The eBay service permits sellers to list items for sale, buyers to bid on
items of interest and all eBay users to browse through listed items. The
Company's service is fully automated, topically arranged, intuitive and easy to
use. From December 31, 1998 to December 31 1999, the number of registered eBay
users grew from approximately 2.1 million to over 10 million. eBay users listed
over 41 million items for sale during the fourth quarter of 1999, up from 13.64
million items in the fourth quarter of 1998. As of December 31, 1999, the
Company had over 3.0 million items listed in over 3,000 categories. Browsers and
buyers can search listings for specific items or search by category, key word,
seller name, recently commenced auctions or auctions about to end. The eBay
pricing format based on auctions creates a sense of urgency among buyers to bid
for goods and creates an entertaining and compelling trading environment. eBay
also provides buyers and sellers a place to socialize and to discuss topics of
common interest. This compelling trading environment fosters a large and growing
commerce-oriented online community.

Industry Background

Growth of the Internet and Online Commerce

     The Internet has emerged as a global medium enabling millions of people
worldwide to share information, communicate and conduct business
electronically. International Data Corporation ("IDC") estimated that the
number of Web users would grow from approximately 150 million worldwide in
1998 to approximately 500 million worldwide by the end of 2003.

     The growing adoption of the Web represents an enormous opportunity for
businesses to conduct commerce over the Internet. IDC estimated that commerce
over the Internet would increase from approximately $40 billion worldwide in
1998 to approximately $900 billion worldwide in 2003.

The Personal Trading Market Opportunity

     eBay's trading platform has historically offered the exchange of goods
among individuals and small businesses, competing with classified
advertisements, collectibles shows, garage sales, flea markets and other venues
such as auction houses. As eBay's service has evolved, its applicability has
expanded to broader categories of items, and to a broader and more global user
base. As a result, the Company's product mix has begun to shift from primarily
collectibles to practical everyday items, such as household goods, office
equipment,

                                       1


services, and other items. With the shift to a broader product offering, the
Company's competition has also broadened, and now includes distributors,
liquidators, retailers, import/export companies, catalog/mail order companies,
and virtually all online and offline commerce participants (consumer-to-
consumer, business-to-consumer, and business-to-business).

     Many of these traditional forums are inefficient because:

     .  their fragmented, regional nature makes it difficult and expensive for
        buyers and sellers to meet, exchange information and complete
        transactions;

     .  they may offer a limited variety or breadth of goods;

     .  they often have high transaction costs; and

     .  they are information inefficient, as buyers and sellers lack a reliable
        and convenient means of setting prices for sales or purchases.

     The Internet offers the first opportunity to create a compelling global
marketplace that overcomes the inefficiencies associated with traditional
trading among individuals and small businesses. An Internet-based, centralized
trading place offers the following benefits:

     .  facilitates buyers and sellers meeting, listing items for sale,
        exchanging information, interacting with each other and, ultimately,
        consummating transactions;

     .  allows buyers and sellers to trade directly, bypassing traditional
        intermediaries and lowering costs for both parties;

     .  is global in reach, offering buyers a significantly broader selection of
        goods to purchase and providing sellers the opportunity to sell their
        goods efficiently to a broader base of buyers;

     .  offers significant convenience, allowing trading at all hours and
        providing continuously updated information; and

     .  fosters a sense of community through direct buyer and seller
        communication, thereby enabling interaction between individuals with
        mutual interests.

     In addition, the community orientation, facilitation of direct buyer to
seller communication and efficient access to information on a buyer's or
seller's trading history can help alleviate the risks of trading. As a result,
a significant market opportunity exists for an Internet-based, centralized
trading environment that applies the unique attributes of the Internet to
facilitate personal trading.

The eBay Solution

     eBay pioneered personal trading of a wide range of goods over the Internet
using an efficient and entertaining auction pricing format and has grown into
the largest and most popular personal trading platform on the Internet. The
core eBay service permits sellers to list items for sale, buyers to bid for
and purchase items of interest and all eBay users to browse through listed
items from any place in the world at any time. eBay offers buyers a large
selection of new and used items that can be difficult and costly to find
through traditional means. eBay also enables sellers to reach a larger number
of buyers more cost-effectively than traditional trading forums.

     The eBay service was originally introduced in September 1995 to create an
efficient forum for individuals to trade with one another. Since its beginning
as a grassroots online trading community, eBay has primarily attracted buyers
and sellers through word of mouth and by providing buyers and sellers a place
to socialize, discuss topics of common interest and ultimately to trade goods
with one another. The number of categories under which eBay users list goods
for sale has grown from 10, when eBay was first introduced, to more than 3,000
as of December 31, 1999. The main categories on eBay currently include
automobiles, antiques & art, books, movies, music, coins & stamps,
collectibles, computers, dolls, dollhouses, jewelry, photo & electronics,
pottery & glass, sports, toys, miscellaneous items ("everything else"), and
premium arts and collectibles.

                                       2


The principal reasons for eBay's success are as follows:

     Largest Online Trading Forum. Unlike other commerce trading forums, eBay
has aggregated a critical mass of buyers, sellers and items listed for sale. As
a result, eBay has become the largest online personal trading forum. As of
December 31, 1999, eBay had over 10 million registered users, offered more than
3,000 product categories and listed more than 3.0 million items for sale, many
of which were unique or otherwise hard to find.

     Compelling Trading Environment. eBay has created a distinctive trading
environment by utilizing an entertaining pricing format, establishing
procedural rules and promoting community values that are designed to
facilitate trade and communications between buyers and sellers. The trading
environment's efficiency is illustrated by the limited need for eBay to
intervene or play a significant role in the trading process. The auction
pricing format creates a sense of urgency among buyers to bid for goods
because of the uncertain future availability of unique items on the website.
Similarly, by accepting multiple bids at increasing prices, the auction
pricing format provides sellers a more efficient means of obtaining a maximum
price for their products.

     Trust and Safety Programs. The Company has developed a number of programs
designed to make users more comfortable with dealing with an unknown trading
partner over the Web. The Company's Feedback Forum encourages every eBay user
to provide comments and feedback on other eBay users with whom they interact
and offers user profiles that provide feedback ratings and incorporate these
comments. In addition, eBay's expanded SafeHarbor(TM) program provides
guidelines for trading, helps provide information to resolve user disputes,
responds to reports of misuse of the eBay service and, if necessary, warns or
suspends users who violate the terms of the Company's user agreement. The
Company's ongoing trust and safety initiatives, including user verification,
credit card requirements for sellers, insurance, integrated escrow,
authentication and new means to help keep previously suspended users from re-
registering on eBay, are all intended to bolster eBay's reputation as a safe
place to trade. The Company has also developed an extensive set of rules and
guidelines designed to educate users and help implement eBay's policy of
prohibiting the sale of illegal or pirated items.

     Cost-Effective, Convenient Trading. eBay allows its buyers and sellers to
bypass traditionally expensive, regionally fragmented intermediaries and
transact business on a seven-day-a-week basis. Because sellers bypass costly
intermediaries, they have lower selling costs and an increased likelihood of
finding buyers willing to pay the target price. Listing an item on eBay requires
sellers to generally pay a nominal placement fee ranging from $0.25 to $2.00 and
an additional success fee from 5% to 1.25% of the transaction value if the sale
is concluded successfully. eBay charges different fees for certain categories of
items, including autos and real estate. As a result, sellers can sell relatively
inexpensive items which had previously been prohibitively expensive to list
through most traditional trading forums. By allowing sellers to conveniently
reach a broad range of buyers, eBay also addresses the time-consuming,
logistical inconvenience of individual selling. Buyers have access to a broad
selection of items and avoid the need to pay expensive markups or commissions to
intermediaries. Buyers are not charged for trading on eBay. The critical mass of
items listed on eBay provides a mutual benefit for buyers and sellers allowing
both to effectively determine an appropriate price for an item.

     Strong Community Affinity. The Company believes that fostering direct
interaction between buyers and sellers with similar interests has enabled it
to create a loyal, active community of users. eBay has introduced a variety of
features and services designed to strengthen this sense of community among
eBay users. The Company facilitates communications between buyers and sellers
by offering chat rooms, bulletin boards, threaded discussion boards, customer
support assistance from eBay personnel or other eBay users and by providing
"About Me" user pages. These community features encourage consumer loyalty and
repeat usage.

     Intuitive User Experience. The eBay service is a fully automated, topically
arranged, intuitive and easy-to-use online service that is available on a
seven-day-a-week basis. Within minutes of completing a simple online form, a
seller can list items for sale on the service, and buyers can submit bids for
items quickly and easily. Buyers can easily search the millions of items
listed by category or specific item. During the course of the transaction,
bidders are notified by email of the status of their bids on a daily basis and
are notified immediately if they are outbid. Sellers and successful bidders
are automatically notified when an transaction is completed. To assist users
further, the Company offers email customer support staffed on a seven-day-a-
week basis.

                                       3


eBay Strategy

     The Company's objective is to build upon its position as the world's
leading online personal trading platform. The key elements of eBay's strategy
are to:

     Expand the eBay Community and Strengthen the eBay Brand. The Company
believes that building greater awareness of the eBay brand within and beyond
the eBay community is critical to expanding its user base and to maintaining
the vitality of the eBay community. Although the Company's early growth and
much of its current growth is attributable to word of mouth, the Company has
introduced aggressive marketing efforts to build its user base and its brand
name. These include:

     .  advertising in targeted publications;

     .  strategic advertising and sponsorship placements on high traffic
        websites;

     .  radio advertising campaigns; and

     .  active participation in other forums such as selected trade shows.

     These traditional and online media placements and word of mouth advertising
give eBay frequent and high visibility media exposure both nationally and
locally.

     Broaden the eBay Trading Platform. The Company has pursued a multi-pronged
strategy for growing the eBay platform within existing product categories,
across new product categories and through geographic expansion--both local and
international. The Company targeted key product categories in its user
programs and marketing activities. The Company has expanded and developed
existing product categories by introducing category-specific bulletin boards
and chat rooms, integrating category-specific content, advertising its service
in targeted publications and participating in targeted trade shows. In
addition, the Company broadened the range of products offered on its trading
platform by seeking to attract new users from the general audience of Internet
users and adding product categories, content, features and other services to
meet this new user demand. The increasing number and importance of practical
(as opposed to collectible) items on the site is illustrative of this
broadened range. The Company has also broadened the range of products that it
offers to facilitate trading on the site, including payment services, shipping
services, authentication and escrow services. In addition, the Company intends
to offer its community additional pricing formats such as fixed price sales.

     Key improvements implemented during 1999 include:

     .  the acquisition of Kruse International, one of the largest land-based
        auctioneers of collectible cars in the world. This acquisition provided
        expertise in the automobile market and led to the launch of eBay's
        collectible and used car categories online;

     .  the acquisition of Butterfield & Butterfield ("B&B"), the fourth largest
        auctioneer of fine arts and collectibles in the world. This acquisition
        permitted the launch of "eBay Great Collections," designed to showcase
        high quality items from auction houses and dealers around the world;

     .  the launch of eBay Regional sites. In 1999, eBay launched 53 regional
        sites that address the 50 largest statistical metropolitan areas in the
        United States to encourage the sale of items that are too bulky or
        expensive to ship, items of a local interest and items that people
        prefer to view before purchasing; and

     .  the launch of over 2,000 new categories that make it easier to find
        items in diverse categories.

     Foster eBay Community Affinity. The Company continues to enhance what is
already the largest and one of the most loyal online trading communities on
the Web. By instilling a vibrant eBay community experience, the Company seeks
to maintain a critical mass of frequent buyers and sellers with a vested
interest in the eBay community. The Company believes that new community tools,
such as AboutMe personal pages and the recently introduced threaded message
boards will continue to contribute to the community dynamic. The Company's
recent trust and safety initiatives, including user verification, requirements
for new sellers to have a credit card

                                       4


on file, insurance, integrated escrow, authentication and appraisal, are
intended to bolster eBay's reputation as a safe place to trade. Consistent
with its desire to foster community, the Company has organized a charitable
fund, known as the eBay Foundation, and involves the members of the eBay
community in determining to which charitable purposes the eBay Foundation's
funds will be applied. See "-The eBay Service-Community Services."

     Enhance Features and Functionality. The Company intends to continually
update and enhance the features and functionality of the eBay website in order
to continue to improve the trading experience on eBay. In 1999, the Company
added several new features and services to help buyers and sellers trade with
greater ease. In January 1999, the Company introduced the "Gallery" and in
September 1999, the ability to search while in the Gallery mode. The Gallery
showcases items in a catalog of pictures rather than text. For sellers, the
Company introduced "Mr. Lister 2.0", a software tool that permits automated
listing of multiple items for sale on eBay. For buyers, the Company introduced
"Personal Shopper", an automated tool that permits buyers to indicate items of
interest that they are alerted to by email when those items are available for
sale on eBay. In June 1999, the Company launched an improved user interface to
make it easier to find information on the eBay site. The Company also launched
its "eBay Anywhere" strategy to permit eBay users to access trading
information through wireless devices such as Skytel 2-way pagers and the Palm
VII personal data assistant. The Company intends to continue refining its
features and services to permit easier, safer and more efficient trade on
eBay. The Company will also continue to provide rapid system response and
transaction processing time by investing in its infrastructure in order to
accommodate additional users, content and items for sale.

     Generally, added features and functionality are deemed to be elements of
the ongoing revision and maintenance of the eBay site. Hardware and software
purchases and customization associated with revisions have been capitalized in
accordance with company policy and are included in computer equipment and
software. Due to the speed of change and continuous nature of site revision,
internal expenses often are judged to have useful lives of less than one year,
or have been more appropriately classified as maintenance related costs. As
such, these costs are expensed as incurred.

     Expand Value-Added Services. In order to offer an end-to-end personal
trading service, the Company intends to provide a variety of "pre-trade" and
"post-trade" services to enhance the user experience and make trading easier.
"Pre-trade" services make listing items for sale easier and include photo
hosting, authentication and seller productivity software. "Post-trade"
services make transactions easier and more comfortable to consummate, such as
payment facilitation, insurance, escrow, shipping and postage. The company
currently provides, or will provide, these services directly or through
strategic partnerships with third parties.

     Key improvements implemented during 1999 include:

     .  the acquisition and partial implementation of Billpoint, which enables
        person-to-person payment on the Internet. In February 2000, eBay
        announced a strategic relationship with Wells Fargo & Co. ("Wells
        Fargo") to jointly address the growing need for person to person
        payments on the Internet. As part of the relationship, Wells Fargo
        purchased a 35% equity interest in Billpoint from Billpoint. Wells Fargo
        also entered into a long-term payment processing and customer care
        contract with Billpoint;

     .  a strategic relationship with E-Stamp to offering electronic postage to
        users of eBay; and

     .  the acquisition of Blackthorne Software which offers the leading seller
        productivity software under the "Auction Assistant" brand.

     The company anticipates that future service offerings may include services
to facilitate the uploading and hosting of photos of listed items, the
shipment of products and expanding the Billpoint payment solution to more of
the eBay community and the Internet community at large.

     Develop International Markets. The Company believes that the Internet
provides a significant opportunity for the creation of a global trading
market. The Company intends to take advantage of this opportunity by
leveraging the eBay service and brand name internationally by developing eBay
for selected international

                                       5


markets and actively marketing and promoting these services. The Company has
introduced country-specific services for Canada, the United Kingdom, Australia,
Germany and as of February 2000, Japan. The Company believes that its user base
already includes users located in over 200 countries.

     The Company can choose from several strategies to enter new international
markets including building a user community from scratch, acquiring a company
already in the local trading market or partnering with strong local companies.
The company has adopted each of these strategies where appropriate, including
the following:

     .  eBay's presence in the United Kingdom has been built with local
        management, grass roots and online marketing and local events;

     .  the market in Germany was built primarily through the June 1999
        acquisition of alando.de.ag, an existing German trading service;

     .  the Company entered into a joint venture with a subsidiary of one of the
        largest media companies in Australia and New Zealand to penetrate that
        market; and

     .  the Company announced in February 2000 that it had entered into a
        relationship with NEC to jointly address the market in Japan. As part of
        that agreement, NEC agreed to purchase a 30% equity interest in eBay
        Japan.

The eBay Service

     The eBay trading platform is a robust, Internet-based, centralized trading
environment that facilitates buying and selling of a wide variety of items.

     Registration. While any visitor to eBay can browse through the eBay service
and view the items listed for sale, in order to bid for an item or to list an
item for sale, buyers and sellers must first register with eBay. Users register
by completing a short online form and thereafter can immediately bid for an
item or list an item for sale. Users in Canada, Germany, Japan (as of February
2000), Australia and the United Kingdom may instead register through a country-
specific home page.

     Buying on eBay. Buyers typically enter eBay through its home page, which
contains a listing of product categories that allows for easy exploration of
current items for sale. Bidders can search for specific items by browsing
through a list of items within a category or subcategory and then "clicking
through" to a detailed description for a particular item. Bidders also can
search specific categories, interest pages or the entire database of item
listings using keywords to describe the types of products in which they are
interested, and eBay's search engine will generate a list of relevant items
with links to the detailed descriptions. Each item is assigned a unique
identifier so that users can easily search for and track specific items. Users
also can search for a particular bidder or seller by name in order to review
his or her item for sale and feedback history as well as search for products by
specific region or search in "Gallery" mode. Once a bidder has found an item of
interest and registered with eBay, the bidder enters the maximum amount he or
she is willing to pay at that time. In the event of competitive bids, the eBay
service automatically increases bidding in increments based upon the then
current highest bid for the item, up to the bidder's maximum price. As eBay
encourages direct interaction between buyers and sellers, bidders wishing
additional information about a listed item can access the seller's email
address and contact the seller. The Company believes that this interaction
between bidders and sellers leverages the personal, one-on-one nature of
trading on the Web and is an important element of the eBay experience. Once
each bid is made, eBay sends a confirmation to the bidder via email, an outbid
notice to the next highest bidder and automatically updates the item's auction
status. During the course of the sale, eBay notifies bidders immediately via
email if they are outbid. Bidders are not charged for making bids or purchases
through eBay. In addition, buyers can also specify items of interest on a
service called "Personal Shopper" and receive automated email messages when
particular items are available for sale on eBay.

     Selling on eBay. Sellers registered with eBay can list a product for sale
by completing a short online form or using "Mr. Lister," "Auction Assistant" or
third party tools that facilitates the listing of multiple items. The

                                       6


seller selects a minimum price for opening bids for the item and chooses
whether the sale will last three, five, seven or ten days. Additionally, a
seller may select a reserve price for an item, which is the minimum price at
which the seller is willing to sell the item and is typically higher than the
minimum price set for the opening bid. The reserve price is not disclosed to
bidders. A seller can elect to sell items in individual item listings or, if he
or she has multiple identical items, can elect to hold a "Dutch Auction." For
example, an individual wishing to sell 10 identical watches could hold 10
individual auctions or hold a Dutch Auction in which the 10 highest bidders
would each receive a watch at the same price and all lower bids would be
rejected. To be eligible to hold a Dutch auction, a seller must have a
sufficiently high feedback rating and must have been a registered seller for at
least 60 days. A seller may also specify that an auction will be a private
auction. With this format, bidders' e-mail addresses are not disclosed on the
item screen or bidding history screen.

     Sellers generally pay a nominal placement fee to list items for sale--$0.25
for an item listing with a minimum starting price of less than $10.00, $0.50
for a minimum starting price of $10.00 to $24.99, $1.00 for a minimum starting
price of $25.00 to $49.99 and $2.00 for a minimum starting price of $50.00 or
more. By paying an additional $1.00, sellers can choose to have a reserve
selling price below which they are not obligated to sell the item. By paying
incremental placement fees, sellers can have items featured in various ways. A
seller can highlight his or her item for sale by utilizing a bold font for the
item heading for an additional fee of $2.00. A seller with a favorable feedback
rating can have his or her auction featured as a "Featured Auction" for $99.95,
which allows the seller's item to be rotated on the eBay home page, or as a
"Category Featured Auction" for $14.95, which allows his or her item to be
featured within a particular eBay category. A seller can choose to place a
seasonal icon (such as a shamrock in connection with St. Patrick's Day) next to
his or her listing for $1.00. A seller can also include a description of the
product with links to the seller's website. In addition, a seller can include a
photograph in the item's description if the seller posts the photograph on a
website and provides eBay with the appropriate Web address. Items may be
showcased in the Gallery section with a catalog of pictures rather than text. A
seller who uses a photograph in his or her listing can have this photograph
included in the Gallery section for $0.25 or featured in the Gallery section
for $19.95. The Gallery feature is available in all categories of eBay. Certain
categories of items, including real estate, automobiles and "Great Collections"
have different pricing. All pricing is subject to change.

     How Transactions are Completed. When an auction ends, the eBay system
validates if a bid exceeded the minimum price, and the reserve price if one has
been set. If the sale was successful, eBay automatically notifies the buyer and
seller via email and the buyer and seller can then consummate the transaction
independent of eBay. At the time of the email notification, eBay generally
charges the seller a success fee equal to 5% of the first $25 of the purchase
price, 2.5% of that portion of the purchase price from $25.01 to $1,000, and
1.25% of that portion of the purchase price over $1,000. At no point during the
process does the Company take possession of either the item being sold or the
buyer's payment for the item. Rather, the buyer and seller must independently
arrange for the shipment of and payment for the item, with the buyer typically
paying for shipping. A seller can view a buyer's feedback rating and then
determine the manner of payment, such as personal check, cashier's check or
credit card, and also whether to ship the item before or after the payment is
received. Under the terms of the Company's user agreement, if a seller receives
one or more bids above the stated minimum or reserve price, whichever is
higher, the seller is obligated to complete a transaction, although the Company
has no power to force the seller or buyer to complete the transaction other
than to suspend them from using the eBay service. In the event the buyer and
seller are unable to complete the transaction and the seller notifies eBay,
eBay credits the seller the amount of the success fee. When items that have a
reserve price sell, sellers are credited the $1.00 reserve fee. Invoices for
placement fees, additional listing fees and success fees are sent via email to
sellers on a monthly basis. All new sellers are required to have a credit card
account on file with eBay. Sellers who pay by credit card are charged shortly
after the invoice is sent.

     Feedback Forum. eBay pioneered a feature to facilitate the establishment of
reputations within its community by encouraging individuals to record comments
about their trading partners on each transaction. Every registered eBay user
has a feedback profile containing compliments, criticisms and other comments by
users who have conducted business or interacted with the person. A recent
enhancement to the Feedback Forum requires feedback to be related to specific
transactions and provides an easy tool for them to match up transaction

                                       7


numbers with the user names of their trading partners. This information is
recorded in a feedback profile that includes a feedback rating for the person
and indicates comments from other eBay users who have interacted with that
person over the past seven days, the past month, the past six months and
beyond. A user who has developed positive reputations over time will have a
color coded star symbol displayed next to his or her user name to indicate the
amount of positive feedback received by the user. eBay users may review a
person's feedback profile to check on the person's reputation within the eBay
community before deciding to bid on an item listed by that person or in
determining how to complete the payment for and delivery of the item.

     The terms of the Company's user agreement prohibit actions that would
undermine the integrity of the Feedback Forum, such as a person's leaving
positive feedback about himself or herself through other accounts or leaving
multiple negative feedback for others through other accounts. The Feedback
Forum system has several automated features designed to detect and prevent some
forms of abuse. For example, feedback posting from the same account, positive
or negative, cannot affect a user's net feedback rating (i.e., the number of
positive postings, less the number of negative postings) by more than one
point, no matter how many comments an individual makes. Furthermore, a user can
only give feedback to his or her trading partners in completed transactions.
Users who receive a sufficiently negative net feedback rating have their
registrations suspended and are unable to bid on or list items for sale. The
Company believes its Feedback Forum is extremely useful in overcoming initial
user hesitancy when trading over the Internet, as it reduces the anonymity and
uncertainty of dealing with an unknown trading partner. See "Risk Factors--We
are subject to risks associated with information disseminated through our
service."

     Trust and Safety Initiatives. The Company developed a number of programs
designed to make users more comfortable with dealing with an unknown trading
partner over the Web. In addition to the Feedback Forum, the Company offers the
SafeHarbor(TM) program, which provides guidelines for trading, helps provide
information to resolve user disputes and responds to reports of misuses of the
eBay service. The Company's SafeHarbor(TM) staff of 182 persons, including
regular employees and contractors, investigates users' complaints of possible
misuse of eBay and take appropriate action, including issuing warnings to users
or suspending users from bidding on or listing items for sale. Some of the
complaints the SafeHarbor(TM) staff investigates include various forms of bid
manipulation, malicious posting of negative feedback and posting illegal items
for sale. The SafeHarbor(TM) group is organized into three areas;
investigations, community watch and fraud prevention. The investigations group
investigates reported trading infractions and misuse of eBay. The fraud
prevention department provides information to assist users with disputes over
the quality of the goods sold or potentially fraudulent transactions and, upon
receipt of an officially filed, written claim of fraud from a user, will
generally suspend the offending user from eBay. The community watch department
investigates the listing of illegal, infringing or inappropriate items on the
eBay site and violations of certain eBay policies. Upon receipt of a written
claim of intellectual property infringement by the owner of the intellectual
property, the Company will remove the offending item from eBay. Users who
repeatedly infringe intellectual property rights are suspended. In addition,
the Company has increased the number of personnel reviewing potentially illegal
items. The Company's trust and safety initiatives, including user identity
verification, insurance, integrated escrow and authentication, are intended to
bolster eBay's reputation as a safe place to trade. See "Risk Factors--Our
business may be harmed by fraudulent activities on our website." eBay has also
recently partnered with Infoglide, a leading provider of similarity search
technology, to help keep previously suspended users from re-registering on
eBay. The Company has introduced a requirement that new sellers must provide a
credit card or pass an identity verification check before being allowed to
sell. The identify verification process is performed by Equifax.

                                       8


     What Can Be Purchased or Sold on eBay. The eBay service has grown from
offering 10 product categories when it was first introduced in September 1995
to offering more than 3,000 categories as of December 31, 1999. As the number
of product categories has grown, the Company periodically organizes the
categories under different headings to reflect the major types of items
currently listed. As of February 2000, these product categories were organized
under the following headings:



        Automobiles                 Great Collections (Premium items)
        Antiques & Art              Jewelry, Gemstones
        Books, Movies, Music        Photo & Electronics
        Coins & Stamps              Pottery & Glass
        Collectibles                Sports
        Computers                   Toys & Beanie Babies
        Dolls, Dollhouses           Everything Else


     Each category has numerous subcategories. As of December 31, 1999, eBay
offered a selection of over 3 million items, with the most popular items sold
on eBay being those that are relatively standardized, well-represented with a
photo (and therefore can be evaluated to some degree without a physical
inspection), small and easily shippable, and relatively inexpensive. As the
eBay community grows and additional items are listed, the Company will
continue to organize items for sale under additional categories to respond to
the needs of the eBay community.

     Community Services. Beyond providing a convenient means of trading, eBay
has devoted substantial resources to building an online trading community, which
the Company believes is one of the strongest on the Web. Key components of the
Company's community philosophy are maintaining an honest and open marketplace
and treating individual users with respect. The Company offers a variety of
community and support features that are designed to solidify the growth of the
eBay community and to build eBay user affinity and loyalty. eBay facilitates
communication between buyers and sellers by offering:

     .  category-specific chat rooms;

     .  the eBay Cafe, a chat room for the entire eBay community;

     .  a bulletin board devoted to user feedback on new features;

     .  an announcements section that covers new features on eBay or other eBay
        news;

     .  customer support boards; and

     .  ""items wanted" listings where users can post notices seeking specific
        items.

     eBay also offers My eBay, which permits users to receive a report of their
recent activity on eBay, including bidding activity, selling activity, account
balances, favorite categories and recent feedback. Users with their own Web
pages also can post link buttons from the user's page to eBay and to a list of
items the user is selling on eBay. The Company recently introduced About Me,
which offers users the opportunity to create their own personal home page free
of charge on eBay using step-by-step instructions provided by the Company. The
About Me home page can include personal information, items listed for sale,
eBay feedback ratings, images and links to other favorite sites.

     In addition, in June 1998, the Company donated 321,750 shares of Common
Stock to the Community Foundation Silicon Valley, a tax-exempt donor-advised
public charity, and established a fund known as the "eBay Foundation." Through
the Community Foundation Silicon Valley, the eBay Foundation sponsors programs
including a recent program in which teachers travel abroad and share their
experiences with their students. The Company solicits user suggestions for
worthwhile charities through the eBay website.

     Customer Support. The Company devotes significant resources to providing
personalized, timely customer service and support. eBay offers customer
support on a seven-day-a-week basis. Most customer support inquiries are
handled via email, with customer email inquiries typically being answered
within 24 hours after submission.

                                       9


In 1999, the Company partnered with Customer Cast, an online customer
satisfaction survey company, to enable eBay to understand and improve on how
well it was serving its customers. Overall customer satisfaction for the
Company's core support email services has improved significantly since
launching the survey in July 1999. The Company offers an online tutorial for
new eBay users. In June 1999, the Company opened a new customer support center
in Salt Lake City, Utah. The center has grown rapidly and, by the end of 1999,
was handling the majority of customer support email. In addition, the Company
offers the SafeHarbor(TM) program and has recently introduced or is developing
a number of trust and safety initiatives. See "--Trust and Safety Initiatives"
above.

Marketing

     eBay's marketing strategy is to promote its brand and attract buyers and
sellers to the eBay service. To attract users to its website, eBay
historically has relied primarily on word of mouth and, to a lesser extent, on
distribution or sponsorship relationships with high traffic websites. Today,
the Company employs a variety of methods to promote its brand and attract
potential buyers and sellers. Currently, eBay uses strategic purchases of
online advertising to place advertisements in areas in which the Company
believes it can reach its target audience. The Company also engages in a
number of marketing activities in traditional media such as advertising; print
media and at trade shows and other events. eBay also advertises in a number of
targeted publications. The Company continues to benefit from frequent and high
visibility media exposure both nationally and locally. While the Company does
not expect the frequency or quality of this type of publicity to continue, the
Company does promote public relations through initiatives such as online
eBay/special event tie-ins and executive speaking engagements. In March 1999,
the Company expanded the scope of its preexisting strategic relationship with
AOL. Under the amended agreement, eBay was given a prominent presence
featuring it as the preferred provider of personal trading services on AOL's
proprietary services (both domestic and international), AOL.com, Digital
Cities, ICQ, CompuServe (both domestic and international) and Netscape. eBay
will pay $75 million over the four-year term of the contract. eBay has
developed a co-branded version of its service for each AOL property which
prominently features each party's brand. AOL is entitled to all advertising
revenue from the co-branded sites. Subsequent to year-end, eBay entered into
marketing agreements with Autotrader.com and GO.com

Operations and Technology

     eBay has a scalable user interface and transaction processing system that
is based on internally-developed proprietary software. The eBay system
facilitates the sale process, including notifying users via email when they
initially register for the service, when they place a successful bid, are
outbid, place an item for sale, and when an auction ends. Furthermore, the
system sends daily status updates to any active sellers and bidders regarding
the state of their current auctions. The system maintains user registration
information, billing accounts, current auctions and historical listings. All
information is regularly archived. Complete listings of all items for sale are
generated regularly. The system regularly updates a text-based search engine
with the titles and descriptions of new items, as well as pricing and bidding
updates for active items. Every time an item is listed on the service, a listing
enhancement option is selected by a seller, or an auction closes with a bid in
excess of the seller-specified minimum bid, the system makes an entry into the
seller's billing account. The system sends electronic invoices to all sellers
via email on a monthly basis. For convenience, sellers may place a credit card
account number on file with eBay, and their account balance is billed directly.
Sellers that are new to the eBay service are now required to place a credit card
account number on file. In addition to these features, the eBay service also
supports a number of community bulletin board and chat areas where users and
eBay customer support personnel can interact.

     The Company's system has been designed around industry standard
architectures and has been designed to reduce downtime in the event of outages
or catastrophic occurrences. The eBay service provides seven-day-a-week
availability, subject to a maintenance period for a few hours during one night
per week. eBay's system hardware is hosted at the Exodus and Abovenet
facilities in Santa Clara, California, which provide redundant communications
lines and emergency power backup. The Company's system consists of Sun
database servers running Oracle relational database management systems and a
suite of Pentium-based Internet servers running

                                      10


the Windows NT operating system. The Company uses Resonate Inc.'s load
balancing systems and its own redundant servers to provide for fault
tolerance. The Company has experienced periodic system interruptions, which it
believes will continue to occur from time to time. These outages have stemmed
from a variety of causes, including third-party hardware and software problems
and human error. The volume of traffic on the Company's website and the number
of items being listed by users has been increasing continually and
exponentially, requiring the Company to expand and upgrade its technology,
transaction processing systems and network infrastructure and add new
engineering personnel. The process of upgrading and expansion is part of the
routine maintenance and revision of the site. Hardware and software changes
associated with the continuous revision have been capitalized in accordance
with company policy and are included in computer equipment and software. Due
to the speed of change and continuous nature of site revision, internal
expenses often are judged to have useful lives of less than one year, or have
been more appropriately classified as maintenance related costs. As such,
these costs are expensed as incurred. The Company may be unable to accurately
project the rate or timing of increases, if any, in the use of the eBay
service or expand and upgrade its systems and infrastructure to accommodate
these increases in a timely manner. Any failure to expand or upgrade its
systems at least as fast as the growth in demand for capacity could cause the
website to become unstable and possibly cease to operate for periods of time.
Unscheduled downtime could harm the Company's business.

     The Company uses internally developed systems to operate its service and
for transaction processing, including billing and collections processing. The
Company must continually improve these systems to accommodate the level of use
of its website. In addition, the Company may add new features and functionality
to its services that would result in the need to develop or license additional
technologies. The Company's inability to add additional software and hardware or
to upgrade its technology, transaction processing systems or network
infrastructure to accommodate increased traffic or transaction volume could have
adverse consequences. These consequences include unanticipated system
disruptions, slower response times, degradation in levels of customer support,
impaired quality of the users' experience on its service and delays in reporting
accurate financial information. The Company's failure to provide new features or
functionality also could result in these consequences. The Company may be unable
to effectively upgrade and expand its systems in a timely manner or integrate
smoothly any newly developed or purchased technologies with its existing
systems. These difficulties could harm or limit its ability to expand its
business. See "Risk Factors--The inability to expand our systems may limit our
growth" and "--System failures could harm our business."

     The Company incurred $831,000, $4.6 million and $23.8 million in product
development expenses in 1997, 1998 and 1999, respectively. The Company
anticipates that it will continue to devote significant resources to product
development in the future as it adds new features and functionality to the
eBay service. The Company capitalizes hardware and software associated with
added features or functionality in accordance with company policy and includes
such amounts in computer equipment and software. Internal expenses are often
judged to have useful lives of less than one year, or have been more
appropriately classified as maintenance related costs. As such, these costs
are expensed as incurred. The market in which the Company competes is
characterized by rapidly changing technology, evolving industry standards,
frequent new service and product announcements, introductions and enhancements
and changing customer demands. Accordingly, the Company's future success will
depend on its ability to adapt to rapidly changing technologies, adapt its
services evolving industry standards and to continually improve the
performance, features and reliability of its service in response to
competitive service and product offerings and evolving demands of the
marketplace. The failure of the Company to adapt to these changes would harm
the Company's business. In addition, the widespread adoption of new Internet,
networking or telecommunications technologies or other technological changes
could require substantial expenditures by the Company to modify or adapt the
Company's services or infrastructure. See "Risk Factors--Our failure to manage
growth could harm us;" "--We must keep pace with rapid technological change to
remain competitive" and "--We need to develop new services, features and
functions in order to expand."

Competition

     Online personal trading is a new, rapidly evolving and intensely
competitive area. The Company expects competition to intensify in the future as
the barriers to entry are relatively low, and current and new competitors can
launch new sites at a nominal cost using commercially available software.
Depending on the category of

                                      11


product, eBay currently or potentially competes with a number of companies
serving particular categories of goods as well as those serving broader ranges
of goods. Broad-based competitors include the vast majority of traditional
department and general merchandise stores as well as emerging online
retailers. These include most prominently: Wal-Mart, Kmart, Target, Sears,
Macy's, JC Penney, Montgomery Ward, Costco, Sam's Club as well as Amazon.com,
Buy.com, AOL.com, Yahoo! shopping and MSN.

In addition, eBay faces competition from specialty retailers and exchanges in
each of its categories of products. For example:

     Antiques: Christies, eHammer, Sotheby's / Sothebys.com, Sothebys.amazon.com

     Coins & Stamps: Collectors Universe, Heritage, Numismatists Online, US Mint

     Collectibles: Franklin Mint

     Musical Instruments: Guitar Center, Harmony-Central.com, MARRS,
     MusicHotBid.com

     Sports Memorabilia: Beckett's, Collectors Universe

     Toys, Bean Bag Plush: Amazon.com, eToys.com, KB Toys, Toys.com, Toys R Us

     Premium Collectibles: Christies, DuPont Registry, Gavelnet, Greg Manning
     Auctions, iCollector, Lycos / Skinner Auctions, Millionaire.com, Phillips
     (LVMH), Sotheby's, Sothebys.amazon.com

     Automotive (used cars): Auction Auto.com, Autobytel.com, AutoMallUSA,
     AutoVantage.com, AutoWeb.com, Barrett-Jackson, CarOrder.com, CarPoint,
     CarScene.com, eClassics.com, Edmunds, GreenLight.com, Hemmings, Newspaper
     classifieds, Used car dealers

     Books, Movies, Music: Amazon.com, Barnes & Noble, Barnesandnoble.com,
     BigStar, Blockbuster, BMG Columbia House, CDNow, Cductive.com, DVD Express,
     Half.com, Reel.com, Spinner.com, Wherehouse, Alibris.com, Bookfinders.com

     Clothing: Bluefly.com, Boo.com, Dockers.com, FashionMall.com, The Gap, J.
     Crew, LandsEnd.com, The Limited, Lucy.com, Macys, The Men's Wearhouse,
     Ross, 3Dshopping.com

     Computers & Consumer Electronics: Best Buy, Buy.com, Circuit City, Compaq,
     CompUSA, Dell, Egghead, Fry's Electronics, Gateway, The Good Guys, IBM,
     MicroWarehouse, The Sharper Image, Shopping.com, ValueAmerica.com

     Home & Garden: IKEA, Crate & Barrel, Furniture.com, Homepoint.com, Home
     Depot, Living.com, Garden.com, Pottery Barn, Ethan Allen, Frontgate

     Jewelry: Ashford.com, Mondera.com

     Sporting Goods/Equipment: dsports.com, FogDog.com, Footlocker, Gear.com,
     golfclubexchange, golftrader.com, MVP.com, PlanetOutdoors.com, Play It
     Again Sports, REI, Sports Authority

     Tools / Equipment / Hardware: Home Depot, HomeBase, Amazon.com, Ace
     Hardware, OSH

     Business-to-Business: Ariba, BidFreight.com, BizBuyer.com, bLiquid.com,
     CloseOutNow.com, CommerceBid.com, Commerce One, Concur Technologies,
     DoveBid, FreeMarkets, iMark, Oracle, PurchasePro.com, RicardoBiz.com,
     Sabre, SurplusBin.com, TradeOut.com, UnionStreet.com, Ventro, VerticalNet

Additionally, the Company faces competition from various online auction sites
including: Amazon.com, the Fairmarket Auction Network (a auction network
including Microsoft's MSN, Excite@Home, Dell Computer, ZD Net, Lycos and more
than 100 others), First Auction, Surplus Auction, uBid, Yahoo! Auctions and a
large number of other companies using an auction format for consumer-to-
consumer or business-to-consumer sales.

     The principal competitive factors in the Company's market include the
following:

     . ability to attract buyers

     . volume of transactions and selection of goods;

                                      12


     . community cohesion and interaction;

     . system reliability;

     . customer service;

     . reliability of delivery and payment by users;

     . brand recognition;

     . website convenience and accessibility;

     . level of service fees; and

     . quality of search tools.

     Some current and potential competitors have longer company operating
histories, larger customer bases and greater brand recognition in other
business and Internet markets than eBay does. Some of these competitors also
have significantly greater financial, marketing, technical and other
resources. Other online trading services may be acquired by, receive
investments from or enter into other commercial relationships with larger,
well established and well financed companies. As a result, some of the
Company's competitors with other revenue sources may be able to devote more
resources to marketing and promotional campaigns, adopt more aggressive
pricing policies and devote substantially more resources to website and
systems development than the Company is able to do. Increased competition may
result in reduced operating margins, loss of market share and diminished value
of the eBay brand. Some of the Company's competitors have offered services for
free and others may do this as well. The Company may be unable to compete
successfully against current and future competitors.

     In order to respond to changes in the competitive environment, the Company
may, from time to time, make pricing, service or marketing decisions or
acquisitions that could harm the business. For example, the Company
implemented an insurance program that generally insures items up to a value of
$200, with a $25 deductible, for users with a non-negative feedback rating at
no cost to the user. New technologies may increase the competitive pressures
by enabling the Company's competitors to offer a lower cost service. Some Web-
based applications that direct Internet traffic to certain websites may
channel users to trading services that compete with the Company.

     Although the Company has established Internet traffic arrangements with
several large online services and search engine companies, these arrangements
may not be renewed on commercially reasonable terms. Even if these
arrangements are renewed, they may not result in increased usage of the eBay
service. In addition, companies that control access to transactions through
network access or Web browsers could promote the Company's competitors or
charge eBay substantial fees for inclusion.

     The land-based auction business is intensely competitive. B&B competes with
two larger and better known auction companies, Sotheby's Holdings, Inc. and
Christie's International plc, as well as numerous regional auction companies.
To the extent that these companies increase their focus on the middle market
properties that form the core of B&B's business, its business may suffer.
Kruse is subject to competition from numerous regional competitors. In
addition, competition with Internet based auctions may harm the land-based
auction business. Although Billpoint's business is new, several new companies
are beginning to enter this market and large companies, including banks and
credit card companies, may become competitors.

Issues Related to the Listing or Sale by Users of Unlawful Items

     The law relating to the liability of providers of online services for the
activities of their users on their service is currently unsettled. The Company
is aware that certain goods, such as firearms, other weapons, adult material,
tobacco products, alcohol and other goods that may be subject to regulation by
local, state or federal authorities, have been listed and traded on its
service. The Company may be unable to prevent the sale of unlawful goods, or
the sale of goods in an unlawful manner, by users of its service, and the
Company may be subject to allegations of civil or criminal liability for
unlawful activities carried out by users through its service. In order to

                                      13


reduce exposure to this liability, the Company has prohibited the listing of
certain items and increased the number of personnel reviewing questionable
items. The Company may in the future implement other protective measures that
could require spending substantial resources or may reduce revenues by
discontinuing certain service offerings. Any costs incurred as a result of
liability or asserted liability relating to the sale of unlawful goods or the
unlawful sale of goods, could harm the Company's business. In addition, the
Company has received significant and continuing media attention relating to
the listing or sale of unlawful goods on the Company's website. This negative
publicity could damage the Company's reputation and diminish the value of its
brand name. It also could make users reluctant to continue to use the
Company's services.

Fraudulent Activities on the eBay Website

     The Company's future success will depend largely upon sellers reliably
delivering and accurately representing their listed goods and buyers paying
the agreed purchase price. The Company has received in the past, and
anticipates that it will receive in the future, communications from users who
did not receive the purchase price or the goods that were to have been
exchanged. While the Company can suspend the accounts of users who fail to
fulfill their delivery obligations to other users, it does not have the
ability to require users to make payments or deliver goods or otherwise make
users whole other than through our limited insurance program. Other than
through this program, the Company does not compensate users who believe they
have been defrauded by other users. The Company also periodically receives
complaints from buyers as to the quality of the goods purchased. Negative
publicity generated as a result of fraudulent or deceptive conduct by users of
our service could damage the Company's reputation and diminish the value of
the Company's brand name. The Company expects to continue to receive requests
from users requesting reimbursement or threatening or commencing legal action
against the Company if reimbursement is not made. This sort of litigation
could be costly for the Company, divert management attention, result in
increased costs of doing business, lead to adverse judgments or could
otherwise harm the Company's business. See "Risk Factors--Our business may be
harmed by fraudulent activities on our website."

Government Inquiries

     On January 29, 1999, the Company received requests to produce certain
records and information to the federal government relating to an investigation
of possible illegal transactions in connection with its website. The Company
has been informed that the inquiry includes an examination of the Company's
practices with respect to these transactions. The Company has provided further
information in connection with this ongoing inquiry. In order to protect the
investigation, the court has ordered that no further public disclosures be
made with respect to the matter.

     On March 24, 2000, B&B received a grand jury subpoena from the antitrust
division of the Department of Justice requesting documents relating to, among
other things, changes in B&B's seller's commissions and buyer's premiums and
discussions, agreements or understandings with other auction houses, in each
case since 1992. The Company believes this request may be related to a
publicly reported criminal investigation of auction houses for price fixing.

     Should these or any other investigations lead to civil or criminal charges
against the Company, eBay would likely be harmed by negative publicity, the
costs of litigation and the diversion of management time and other negative
effects even if the Company ultimately prevails. The Company's business would
certainly suffer if the Company were not to prevail in any action like this.
Even the process of providing records and information can be expensive, time
consuming and result in the diversion of management attention.

     A large number of transactions occur on the eBay website. As a result, the
Company believes that government regulators have received a substantial number
of consumer complaints about the eBay website which, while small as a
percentage of its total transactions, are large in aggregate numbers. As a
result, the Company has from time to time been contacted by various federal,
state and local regulatory agencies and been told that they have questions
with respect to the adequacy of the steps the Company takes to protect its
users

                                      14


from fraud. For example, the City of New York--Department of Consumer Affairs
received complaints from users about transactions on the eBay website. In
investigating these complaints, the Department of Consumer Affairs requested
information about the Company and these transactions. The Company has provided
the requested information. The Company is likely to receive additional
inquiries from regulatory agencies in the future, which may lead to action
against the Company. The Company has responded to all inquiries from regulatory
agencies by describing its current and planned antifraud efforts. If one or
more of these agencies is not satisfied with the Company's response to current
or future inquiries, the resultant investigations and potential fines or other
penalties could harm the Company's business.

     The Company has recently provided information to the antitrust division of
the Department of Justice in connection with an inquiry into the Company's
conduct with respect to "auction aggregators" including the Company's licensing
program and its lawsuit against Bidder's Edge. Should the antitrust division
decide to take action against the Company, the Company would likely be harmed
by negative publicity, the costs of the action, possible private antitrust
lawsuits, the diversion of management time and effort and penalties the Company
might suffer if the Company ultimately were not to prevail. See "Risk Factors--
Government inquiries may lead to charges or penalties."

Privacy Policy

     The Company believes that issues relating to privacy and the use of
personal information relating to Internet users are becoming increasingly
important as the Internet and its commercial use grow. The Company has adopted a
detailed privacy policy that outlines how eBay uses information concerning its
users and the extent to which other registered eBay users may have access to
this information. Users must acknowledge and agree to this policy when
registering for the eBay service. The Company does not sell or rent any
personally identifiable information about its users to any third party; however,
the Company does disclose information to sellers and winning bidders that
contains the seller's and winning bidder's name, email address and telephone
number. The Company also discloses certain personally identifiable information
to its subsidiaries and business partners in connection with the provision of
services by these entities. The Company also will disclose customer information
in its possession (other than credit card information) to a law enforcement
agency or member of the Legal Buddy Program that requests this information in
connection with a civil, criminal or regulatory investigation. The Company also
uses information about its users for internal purposes in order to improve
marketing and promotional efforts, to analyze website usage statistically, and
to improve content, product offerings and website layout. eBay is a member of
the TRUSTe program, a non-profit independent organization that audits websites'
privacy statements and audits their adherence thereto.

New and Existing Regulation of the Internet

     The Company is subject to the same federal, state and local laws as other
companies conducting business on the Internet. Today there are relatively few
laws specifically directed towards online services. However, due to the
increasing popularity and use of the Internet and online services, many laws
relating to the Internet are being debated at the state and federal levels and
it is possible that laws and regulations will be adopted with respect to the
Internet or online services. These laws and regulations could cover issues such
as online contracts, user privacy, freedom of expression, pricing, fraud,
content and quality of products and services, taxation, advertising,
intellectual property rights and information security. Applicability to the
Internet of existing laws governing issues such as property ownership,
copyrights and other intellectual property issues, taxation, libel, obscenity
and personal privacy is uncertain. The vast majority of these laws were adopted
prior to the advent of the Internet and related technologies and, as a result,
do not contemplate or address the unique issues of the Internet and related
technologies. Those laws that do reference the Internet, such as the recently
passed Digital Millennium Copyright Act, have not yet been interpreted by the
courts and their applicability and reach are therefore uncertain. In addition,
numerous states, including the State of California, where the Company's
headquarters are located, have regulations regarding how "auctions" may be
conducted and the liability of "auctioneers" in conducting such auctions. No
definitive legal determination has been made with respect to the

                                      15


applicability of the California regulations to the Company's business to date
and little precedent exists in this area. Several states are considering
imposing these regulations upon the Company or its users, which could harm the
business. In addition, as the nature of the products listed by the Company's
users change, eBay may become subject to new regulatory restrictions.

     Several states have proposed legislation that would limit the uses of
personal user information gathered online or require online services to
establish privacy policies. The Federal Trade Commission also has recently
settled proceedings regarding the manner in which personal information is
collected from users and provided to third parties. Changes to existing laws or
the passage of new laws intended to address these issues could directly affect
the way the Company does business or could create uncertainty in the
marketplace. This could reduce demand for the Company's services, increase the
cost of doing business as a result of litigation costs or increased service
delivery costs, or otherwise harm the business. In addition, because the
Company's services are accessible worldwide, and facilitate sales of goods to
users worldwide, foreign jurisdictions may claim that the Company is required
to comply with their laws. As the Company expands its international activities,
it will become obligated to comply with the laws of the countries in which the
Company operates. Compliance may be more costly or may require the Company to
change its business practices or restrict service offerings relative to those
in the United States. The Company's failure to comply with foreign laws could
subject the Company to penalties ranging from fines to bans on its services.

Employees

     As of March 1, 2000, the Company had 1,212 employees. The Company has never
had a work stoppage, no employees are represented under collective bargaining
agreements and the Company believes its relations with its employees are good.

                                      16


- -------------------------------------------------------------------------------
PART III

Item 10: Directors and Executive Officers of the Registrant

- -------------------------------------------------------------------------------

Executive Officers and Directors

 The following table sets forth certain information regarding the executive
officers and directors of the Company as of April 24, 2000:



           Name           Age                      Position
 ------------------------ --- -------------------------------------------------

Pierre M. Omidyar.......  32 Founder, Chairman of the Board and a director
Margaret C. Whitman.....  43 President, Chief Executive Officer and a director
Gary F. Bengier.........  45 Vice President, Chief Financial Officer
Rebecca M. Guerra.......  47 Vice President, Human Resources
Michael R. Jacobson.....  45 Vice President, Legal Affairs, General Counsel
                             and Secretary
Jeffrey D. Jordan.......  41 Vice President Regionals and Services
Jeffrey S. Skoll........  35 Vice President, Strategic Planning and Analysis
Brian T. Swette.........  46 Chief Operating Officer
Maynard Webb....... ....  44 President of eBay Technologies
Steven P. Westly........  43 Senior Vice President, General Manager Premium
                             and International
Michael K. Wilson.......  42 Chief Scientist
Philippe Bourguignon (2)  52 Director
Scott D. Cook (1).......  47 Director
Robert C. Kagle (1)(2)..  44 Director
Dawn G. Lepore (1)......  46 Director
Howard D. Schultz (2)...  46 Director

- --------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.

     Pierre M. Omidyar founded eBay as a sole proprietorship in September 1995.
He has been a director and Chairman of the Board since eBay's incorporation in
May 1996 and also served as its Chief Executive Officer, Chief Financial
Officer and President from inception to February 1998, November 1997 and
August 1996, respectively. Prior to founding eBay, Mr. Omidyar was a developer
services engineer at General Magic, a mobile communication platform company
from December 1994 to July 1996. Mr. Omidyar co-founded Ink Development Corp.
("Ink") (later renamed eShop) in May 1991 and served as a software engineer
there from May 1991 to September 1994. Prior to co-founding Ink, Mr. Omidyar
was a developer for Claris, a subsidiary of Apple Computer, and for other
Macintosh-oriented software development companies. Mr. Omidyar holds a B.S.
degree in Computer Science from Tufts University.

     Margaret C. Whitman has served as President and Chief Executive Officer of
eBay since February 1998 and a director since March 1998. From January 1997 to
February 1998, she was General Manager of the Preschool Division of Hasbro
Inc., a toy company. From February 1995 to December 1996, Ms. Whitman was
employed by FTD, Inc., a floral products company, most recently as President,
Chief Executive Officer and a director. From October 1992 to February 1995,
Ms. Whitman was employed by The Stride Rite Corporation, in various
capacities, including President, Stride Rite Children's Group and Executive
Vice President, Product Development, Marketing & Merchandising, Keds Division.
From May 1989 to October 1992, Ms. Whitman was employed by The Walt Disney
Company ("Disney"), an entertainment company, most recently as Senior Vice
President, Marketing, Disney Consumer Products. Before joining Disney, Ms.
Whitman was at Bain & Co., a consulting firm, most recently as a Vice


President. Ms. Whitman currently serves on the board of directors of Staples,
Inc. Ms. Whitman holds an A.B. degree in Economics from Princeton University
and an M.B.A. degree from the Harvard Business School.

     Gary F. Bengier serves eBay as Vice President, Chief Financial Officer and
has been eBay's Chief Financial Officer since November 1997. From February 1997
to October 1997,Mr. Bengier was Vice President and Chief Financial Officer of
VXtreme, Inc. a developer of Internet video streaming products. Prior to that
time, Mr. Bengier was Corporate Controller at Compass Design Automation, a
publisher of electronic circuit design software, from February 1993 to February
1997. Mr. Bengier has also held senior financial positions at Kenetech Corp., an
energy services company, and Qume Corp., a computer peripherals company, where
he participated in numerous debt and equity financing transactions. Mr. Bengier
holds a B.B.A. degree in Computer Science and Operations Research from Kent
State University and an M.B.A. degree from the Harvard Business School.

     Rebecca M. Guerra has served as eBay's Vice President, Human Resources
since June 1999. From August 1992 to June 1999, Ms. Guerra was Vice President,
Human Resources of Adobe Systems, Inc. From February 1989 to August 1992, Ms.
Guerra was Director of Human Resources for Mips Computer Systems (Silicon
Graphics, Inc.) Ms. Guerra holds a degree in Bachelor of Science and Commerce
from University of Santa Clara and a Master of Business Administration, Finance
and Accounting from University of Santa Clara.

     Michael R. Jacobson has served as eBay's Vice President, General Counsel
and Secretary since August 1998. From 1986 to August 1998, Mr. Jacobson was a
partner with the law firm of Cooley Godward LLP, specializing in securities
law, mergers and acquisitions and other transactions. Mr. Jacobson holds an
A.B. degree in Economics from Harvard College and a J.D. degree from Stanford
Law School.

     Jeffrey D. Jordan has served as eBay's Vice President, Regionals and
Services since September 1999. From September 1998 to September 1999, Mr. Jordan
served as Chief Financial Officer for Hollywood Entertainment and President of
their subsidiary, Reel.com. From September 1990 to September 1998, Mr. Jordan
served in various capacities including most recently Senior Vice President and
Chief Financial Officer of The Disney Store Worldwide, a subsidiary of the Walt
Disney Company. Mr. Jordan holds a BA in Political Science and Psychology from
Amherst College and a M.B.A. degree from the Stanford Graduate School of
Business.

     Jeffrey S. Skoll has served as eBay's Vice President Strategic Planning and
Analysis since February 1998, its President from August 1996 to February 1998
and as a director from December 1996 to March 1998. From July 1995 to July
1996, Mr. Skoll served as Channel Marketing Manager for Knight-Ridder
Information Inc., an online information services company and from September
1993 to July 1995 was a student at the Stanford Graduate School of Business.
Prior to that time, Mr. Skoll was President of Skoll Engineering, a systems
consulting firm that he founded, from September 1987 to August 1993. Mr. Skoll
also co-founded Micros on the Move Ltd., a computer rentals company, as an
adjunct to Skoll Engineering in 1990. Mr. Skoll holds a B.a.S.C. degree in
Electrical Engineering from the University of Toronto and an M.B.A. degree
from the Stanford Graduate School of Business.

     Brian T. Swette now serves eBay as Chief Operating Officer and previously
served as Senior Vice President of Marketing since August 1998. From 1981 to
June 1998, Mr. Swette was employed by Pepsi-Cola Beverages, a global beverage
company, in various capacities including most recently Executive Vice President
and Chief Marketing Officer--Global Beverages. Mr. Swette serves on the board of
directors of J.Crew Apparel. Mr. Swette holds a B.S. degree in Economics from
Arizona State University.

     Maynard Webb has served as President, eBay Technologies since August 1999.
From July 1998 to August 1999, Mr. Webb was Senior Vice President and Chief
Information Officer at Gateway, Inc.  From February 1995 to July 1998, Mr. Webb
was Vice President and Chief Information Officer at Bay Networks, Inc.  From
June 1991 to January 1995, Mr. Webb was Director, IT at Quantum Corporation.
Mr. Webb holds a BAA degree from Florida Atlantic University.


     Steven P. Westly now serves eBay as Senior Vice President, General Manager
Premium and International and previously served as eBay's Vice President
Marketing and Business Development since August 1997. From July 1996 to August
1997, Mr. Westly was Vice President, Business Development of WhoWhere?, an
Internet directory and Web-based email company. Prior to that time, Mr. Westly
was Director of Sales for Netcom, an Internet service provider, from August 1995
to July 1996 and was Deputy Director of Office of Economic Development, City of
San Jose, California, from April 1991 to August 1995. Before joining the Office
of Economic Development, Mr. Westly served as President of Codd and Date
International, a relational database consulting firm, from January 1990 to March
1992 and was the Managing Director of Bridgemere Capital, an investment banking
firm, from 1987 to 1990. Mr. Westly holds a B.A. degree in History from Stanford
University and an M.B.A. degree from the Stanford Graduate School of Business.

     Michael K. Wilson now serves eBay as Chief Scientist and previously served
as eBay's Senior Vice President Product Development and Site Operations and Vice
President Product Development and Site Operations since January 1997. From
October 1995 to January 1997, Mr. Wilson was Vice President of WELL Engaged,
L.L.C., a wholly-owned subsidiary of The Well, a software company. Prior to that
time, Mr. Wilson was an engineer for daVinci Time and Space, a television
company, from February 1995 to October 1995, an engineer for eShop, a software
company, from February 1992 to August 1994 and a Director of Mainframe
Engineering for Neuron Data, an engineering company, from 1987 to 1991.

     Phillipe Bourguignon has served as a director of eBay since December 1999.
Mr. Bourguignon has served as Chairman of the Board of Club Mediterranee S.A.,
since April 1997.  Prior to this appointment, Mr. Bourguignon was Chief
Executive Officer of Euro Disney S.A., the parent Company of Disneyland Paris,
since 1993 and Executive Vice President of the Walt Disney Company (Europe)
S.A., since October 1996.  Mr. Bourguignon was named President of Euro Disney in
1992, a post he held through April 1993.  He joined the Walt Disney company in
1988 as head of Real Estate development.  Mr. Bourguignon holds a Masters Degree
in Economics at the University of Aix-en-Provence and holds a post-graduate
diploma from the Institut d'Administration des Enterprises (IAE) in Paris.

     Scott D. Cook has served as a director of eBay since June 1998. Mr. Cook is
the founder of Intuit Inc., a financial software developer. Mr. Cook has been a
director of Intuit since March 1984 and its Chairman of the Board since March
1993.  From March 1984 to April 1994, Mr. Cook served as President and Chief
Executive Officer of Intuit. Mr. Cook also serves on the board of directors of
Amazon.com.   Mr. Cook holds a B.A. degree in Economics and Mathematics from the
University of Southern California and an M.B.A. degree from the Harvard Business
School.

     Robert C. Kagle has served as a director of eBay since June 1997. Mr. Kagle
has been a Member of Benchmark Capital Management Co., L.L.C. the General
Partner of Benchmark Capital Partners, L.P. and Benchmark Founders' Fund, L.P.,
since its founding in May 1995. Mr. Kagle also has been a General Partner of
Technology Venture Investors since January 1984. Mr. Kagle also serves on the
board of directors of Ariba, Inc. and E-LOAN, Inc.  Mr. Kagle holds a B.S.
degree in Electrical and Mechanical Engineering from the General Motors
Institute (renamed Kettering University in January 1998) and an M.B.A. degree
from the Stanford Graduate School of Business.

     Ms. Dawn G. Lepore, has served as a director of eBay since December 1999.
Ms. Lepore is Vice Chairman and Chief Information Officer and a member of the
Management Committee of the Charles Schwab Corporation where she has served for
over sixteen years in various capacities. Prior to her appointment as Chief
Information Officer at Schwab in October 1993, Ms. Lepore served as Senior Vice
President of Information Technology at Scwab from May 1993 to October 1993,
responsible for the development of a wide range of systems to support Schwab's
growing product offerings and client base. She also led a strategic initiative
for redesigning Schwab's entire technology platform. Ms. Lepore currently serves
on the board of directors of the Times Mirror Company and Viador, Inc. Ms.
Lepore holds a B.A. degree from Smiths College in Music.


     Howard D. Schultz has served as a director of eBay since June 1998. Mr.
Schultz is the founder of Starbucks Corporation, a provider of gourmet coffee,
and has been its Chairman of the Board and Chief Executive Officer since its
inception in 1985. From 1985 to June 1994, Mr. Schultz was also President of
Starbucks. Mr. Schultz was the director of Retail Operations and Marketing for
Starbucks Coffee Company, a predecessor to Starbucks from September 1982 to
December 1985 and was the Chairman of the Board, Chief Executive Officer and
President of Il Giornale Coffee Company, a predecessor to Starbucks, from
January 1986 to July 1987. Mr. Schultz is also one of two founding members of
Maveron LLC, a company providing advisory services to consumer-based businesses,
and is one of two members of a limited liability company that serves as a
general partner of its affiliated venture capital fund, Maveron Equity Partners,
L.P. Mr. Schultz also serves on the board of directors of Drugstore.com, Inc.


                                  SIGNATURES

  In accordance with the requirements of the Securities Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                  eBAY INC.




                                      
Date: April 27, 2000

Principal Executive Officer:                           Principal Financial Officer and Principal
                                                       Accounting Officer:

By :  /s/  Margaret C. Whitman                         By :  /s/  Gary F. Bengier
    --------------------------------------------           -------------------------------------------
    Margaret C. Whitman                                    Gary F. Bengier
    President and Chief Executive Officer                  Vice President, Chief Financial Officer

                              Additional Directors

By :   /s/  Pierre M. Omidyar                          By :   /s/  Philippe Bourguignon
     -------------------------------------------           -------------------------------------------
     Pierre M. Omidyar                                     Philippe Bourguignon
     Founder, Chairman of the Board and Director           Director

By :   /s/  Scott D. Cook                              By :   /s/  Robert C. Kagle
     -------------------------------------------           -------------------------------------------
     Scott D. Cook                                         Robert C. Kagle
     Director                                              Director

By :   /s/  Dawn G. Lepore                             By :   /s/  Howard D. Schultz
     ------------------------------------------            -------------------------------------------
      Dawn G. Lepore                                       Howard D. Schultz
      Director                                             Director