CEO Whitman looks overseas, ponders peer-to-peer

Since Tuesday, shares of the San Jose, Calif.-based company have surged about 25 percent as analysts and investors digested a presentation Whitman made late Monday at the Pacific Crest 2000 e.conference in Vail, Colo.

Specifically, Whitman said eBay will unveil automatic translation and currency conversion software in the next year that will allow people to more easily buy and sell items across international borders.

During an interview at the conference with CNET News.com, Whitman provided details about the obstacles to implementing the technology and what it could mean for consumers worldwide.

She also candidly discussed other subjects facing the company, including the threat posed by peer-to-peer technology, popularized by the success of Napster.

CNET News.com: Some say that peer-to-peer e-commerce or file-sharing technology will revolutionize the face of the Internet--and have drastic consequences for centralized marketplaces such as eBay. Are you afraid of P2P technology such as Gnutella?
Whitman: We're not, actually. We're not quite sure what it means yet for eBay. We have a little team at eBay that's thinking about P2P and file-sharing technology and the implications for eBay, and how we'd incorporate that into our services if need be. Frankly, we haven't come to a definitive conclusion. It's too early to predict...But I think you have to think broadly. When you see the rates of adoption of Gnutella or Napster, you have to think what that means to your business.

What has the popularity of Napster taught you?
That it's incredibly vibrant and people really like it. This has touched a consumer nerve unlike almost anything I've ever seen. The number of users to Napster was enormous, and they clearly captured a segment of consumers.

Napster lets people download music without charging them for the service, and now many users say they refuse to pay for music. What does this mean for eBay? Will it have to stop charging people $1 or $2 service fees for auctioning merchandise?
I doubt it. We have created a marketplace that has added value for buyers and sellers. But that's why we have a team to look at this technology and understand what the long-term implications are for eBay.

Regarding this new technology that could enhance eBay's global expansion, you say the translation and conversion technology is revolutionary. Is that just a fanciful pipe dream or a strategy to boost the stock price? Can an online auction company actually transform economies and reshape the global marketplace?
There is a real frontier here that would truly make global trading a reality. You think about the third world, villagers in Guatemala and Africa who have handicrafts to sell, who could list in their currency and their language and sell to the industrialized world. eBay is creating new trade on a global basis that the world has never seen--that's what gets us up in the morning.

It creates a marketplace for less developed countries...I see it more as an outbound seller community. As that seller community makes more money for their town or village, they then have more purchasing power to buy more products and services from the more developed world...Certainly it has the power to transform countries and cities and villages and empower people to make a living in ways they could not before eBay.

Before you launch the international translation and currency conversion service and people begin ordering items outside of their home country, how will you deal with vastly different commerce regulations in each country?
That question is the issue Yahoo is facing with the Nazi items in France. What we are going to do in France is try to help the government by putting up warning signs that say, "We are a U.S.-based site that does not conform to the rules...about Nazi memorabilia." We're going to bend over backward to work with the French government and French political groups to try to enable a solution that is French...We've taken a "work really closely, let's be best friends" approach with local governments and political groups.

It's complicated. We are pioneering new ground here. You can go to eBay.fr (the company's French site), but you can also go to eBay.com (the company's U.S. site). The same is true for eBay.de (Germany) or eBay.jp (Japan). We have to do it on a case-by-case basis. The country managers, one of their responsibilities is working closely with the political groups in each country, as we do here in the United States.

Frankly, we're feeling our way. We're going to make mistakes until we learn to optimize this on a global basis. It's going to be 10 years before there's a seamless protocol, if then, on the Web. Until then, we're going to have to navigate the snakes. And sometimes you're going to get a toe bitten off. You're going to have to backtrack and work very closely with law enforcement, the government and political groups to come up with a solution that works for each and every country, and it's labor intensive.

If you launch translation technology within the next year, as you predict, will consumers be ready for it?
The audience is willing to do it today. It's fascinating how much cross-border transaction there is, with people actually translating emails on their own. There are tons of cross-border transactions between the U.K., Australia and the United States already, obviously.

Then why not do it now? What's the biggest obstacle to implementing the technology?
There are three companies right now that have translation software in the works--eLingo, eTranslate and WorldLingo. We will not develop the technology on our own; we're going to buy it from someone. The difficulty right now is that none of these companies cover all of these languages. Some have Asian language expertise, some have European expertise, and others have other expertise. We'd love to go to one vendor and buy the whole thing. In fact, we're going to have to put together two or three of these vendors to do this.

The great thing about eBay is that this doesn't have to be perfect. This is not diplomatic relations. This is not military secrets. This is trading $50 to $100 items. Our users have expressed a willingness to work with "pretty good"--not perfect, but pretty good...I was with one of these vendors the other day and watched the entire eBay site translate into Italian in about 35 seconds. So it's very cool. Our Italian staff was able to look at this and say it wasn't perfect, but it was understandable and usable. With email it's a little bit more complicated because there are colloquialisms in the way people write. But we took 20 customer support emails and immediately translated into Italian, and our Italian users could understand them and thought that it was actually usable.

Will this significantly increase the size of your global staffing or is much of it automated?
A lot of it will be technology driven. You can't possibly have people translating email...But as we go into each country, and this is part of our business model, we have to have customer support in that language, in that territory. We have customer support now around the world, anchored by our customer support facility in Salt Lake City, which actually has the capability of 17 languages.

What will that mean to eBay's central office in San Jose? Might you have a virtual headquarters?
We will probably always be a U.S.-based company and learn to deal. The fun thing about eBay is that we're pioneering a whole new marketplace. I think if anyone had said five years ago that almost $5 billion in merchandise could be bought and sold between individuals who didn't know each other on eBay, you'd say they're crazy. You have to scroll forward and say, "Gee, what are the possibilities of cross-border trade in a way that has never been done before?" It's going to be tremendous.