U.S. Markets closed

Amazon (AMZN) Faces Lawsuit with Q3 Earnings Report Just Around the Corner

Nimah Quadri
Amazon (AMZN) stock dipped almost 2% Thursday after facing a lawsuit filed by eBay (EBAY).

Amazon AMZN stock dipped almost 2% Thursday after facing a lawsuit filed by eBay EBAY. Amazon is accused of illegally poaching sellers to its marketplace through eBay's internal messaging system, according to the Wall Street Journal. Amazon and eBay are head to head competitors when it comes to both sellers and consumers. 

Amazon focuses more on its buyers and invites them to check the website and make purchases based on their own needs. Whereas, eBay relies on its sellers to make a profit through their sales on eBay’s marketplace.

With its quarterly report coming out soon, will this incident make any difference to how investors view Amazon?

Let’s list out the different accusations eBay set out in the lawsuit against Amazon and see if they will have any impact on the company.

1.       EBay accused Amazon of having perpetrated a scheme over the years to infiltrate and get all of the information on eBay's internal member email system.

2.       The scheme is so widespread that it: involves Amazon representatives spanning over many different countries, all targeting eBay employees.

3.       The accounts that were used to send messages came from devices linked to Amazon IP addresses, as the scheme was coordinated through Amazon's headquarters.

4.        Amazon intentionally interfered with contractual and economic relations. They also committed fraud and violation of the California penal and business professions codes.

These are only some of the main points and it seems as though eBay had a lot more to say in relation to their competitor. Currently, Amazon has not said anything in response to this situation, but note that it is investigating the claim. Both companies’ shares were down through afternoon trading Thursday. However, does all of this really make any difference to Amazon in the long run?  

We are aware that Amazon dominates the e-commerce space day by day. According to the Wall Street Journal, roughly 50% of U.S. online sales come from Amazon. It is certain that no matter what there will be rivalry and competition between companies within the same industry. EBay has made efforts throughout the years to catch up to Amazon with an easier to navigate website and selling 80% new products.

Plus, Amazon has faced many lawsuits in different areas over the years, so it is no surprise the company has not said anything yet as they are aware of how to handle these situations. Yes, it is deteriorating to a company to face a lawsuit and all of these accusations which may or may not be true in the short-run. However, if we look at this from a long-term perspective, the most Amazon will have to do is settle for monetary relief and, as stated in the lawsuit, permanently stop misusing eBay’s messaging system.


Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius. Click for details >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
eBay Inc. (EBAY) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research