EBAY'S PAYMENT PROCESSOR Paypal has filed a lawsuit against Google alleging that it hired Paypal's top mobile payment guru in order to obtain trade secrets.
Google announced its 'mobile wallet' system yesterday that allows users to use their Android phones to pay for items. However Paypal claims that Google's hiring in January of Osama Bedier, a senior Paypal executive who was responsible for 'mobile platform and new ventures', and previously Stephanie Tilenius, a former Ebay executive, provided Google with access to confidential business information about Paypal's trade secrets.
Tilenius joined Google before Bedier, and Paypal claims that Tilenius "solicited and recruited him". This, Paypal says, means "Tilenius violated her contractual obligations to Ebay". It's a similar case with Bedier, with Paypal saying, "Before and since his arrival at Google, Bedier has also violated his obligations to Ebay by soliciting and recruiting Paypal employees to work at Google".
However Paypal is concentrating its fury on Google's hiring of Bedier, whom the firm claims "was Paypal's senior leader charged with bringing its mobile payment and point of sale technologies and services to retailers". Its complaint continues, "Through this work, he had an intimate knowledge of Paypal's capabilities, strategies, plans, and market intelligence regarding mobile payment and related technologies - information constituting in part PayPal's trade secrets."
Paypal doesn't bother to tiptoe around the issue, blunting stating, "In the course of his work at Google, Bedier and Google have misappropriated Paypal trade secrets by disclosing them within Google and to major retailers."
If this sounds like sour grapes to you then you might not be far wrong. Paypal claims that from 2008 until 2011 it was negotiating a deal with Google where "Paypal would serve as a payment option for mobile app purchases on Google's Android Market". It alleges that during that time Paypal provided Google with an "extensive education in mobile payments" and that Bedier was the senior Paypal executive charged with leading the negotiations with Google.
With Google launching its own payment system, it's highly unlikely that Paypal will feature as a payment option. Ironically, if that should happen, it would be similar to Ebay's policy of requiring every auction on its web site marketplace to feature Paypal as a payment processor.
Paypal's lawsuit was timed nicely to put a damper on Google's launch of its mobile payment system. Although Google didn't mention when the system will come to the UK, given the widespread adoption of its Android operating system, you can understand why Paypal might be miffed if it felt that one of its senior employees did it wrong and took valuable information over to Google.
Expect Paypal's action against Google to rumble on as mobile payments are expected to become a major revenue generator for firms such as Apple, Google and Microsoft. µ
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