Submitted by Ding ding ding ding – I think we have a record here. Launched yesterday, Google Wallet has already attracted a lawsuit. While patent lawsuits are teh shizzle these days, this lawsuit is a little different, so sadly I can’t trot out my usual ‘software patents bad’ lines (aww). PayPal has sued Google over its Wallet service, claiming that one key former PayPal executive who accepted a job at Google took trade secrets with him.
So, this is a little different than your usual technology lawsuit. It would seem there’s kind of a history to this one, as Google and PayPal were in negotiations to have PayPal become a payment option in the Android Market. These negotiations were led, from PayPal’s side, by Osama Bedier. During these negotiations, Bedier was interviewed for a job by Google, but he didn’t inform PayPal about this.
Obviously, Bedier has intimate knowledge of PayPal’s inner workings and mobile payment technology – which the company had already been working on for a while – and he took this knowledge with him when he moved to Google. At Google, he became responsible for Mobile Payments, so he could’ve definitely put his knowledge to work. To make matters more interesting: he was hired by Google’s Stephanie Tilenius, a former eBay employee (PayPal is owned by eBay).
“We spend a lot of time and energy creating the things that make PayPal unique and a preferred way to pay for almost 100 million people around the world,” writes Amanda Pires, senior director PayPal global communications, “We treat PayPal’s ‘secrets’ seriously, and take it personally when someone else doesn’t. So we made a decision today. We filed a lawsuit against Google and two former colleagues who now work there, Osama Bedier and Stephanie Tilenius.”
Google has responded to several media enquiries about the case. “Silicon Valley was built on the ability of individuals to use their knowledge and expertise to seek better employment opportunities, an idea recognized by both California law and public policy. We respect trade secrets, and will defend ourselves against these claims,†Google told AllThingDigital.
This is an interesting case. As we all know, most high-profile lawsuits in the technology industry are about one company not being able to compete with another on merit, and considering Google is entering on PayPal’s turf, it’s tempting to classify this as such a case. However, the story of former employees moving around is hard to ignore, and it doesn’t seem at all unlikely that these employees have transferred PayPal’s ‘trade secrets’ to Google.
All in all, yet another one to add to the pile.
I’m shocked that it took them this long to do it.
“We spend a lot of time and energy creating the things that make PayPal unique and a preferred way to pay for almost 100 million people around the world. We treat PayPal’s ‘secrets’ seriously, and take it personally when someone else doesn’t. So we made a decision today. We filed a lawsuit against Google and two former colleagues who now work there, Osama Bedier and Stephanie Tilenius.
…
Amanda Pires
Senior director, PayPal global communications”
Wow, what a phenomenal blunder: Amanda Pires placed the word “secrets” in quotes! She’s implying that the trade secret vernacular doesn’t exactly fit the context of it’s use.
I don’t know anything about the case, or if it has any merit, but I found this humorous.
Edit: What are the chances they’ll revise their statement?
Edited 2011-05-27 23:15 UTC
What stopped or is stopping PayPal from creating an app for Nexus S and NFC? I wonder what “secrets” could they have taken from PayPal that are applicable to mobile payments?.
The idea of a mobile payment? The Japanese have PayPal beat on that.
Google has Google Checkout. And Wallet adds only the GCard. Basically a publicly available feature of PayPal that has been copied by anyone and everyone.
Plans that PayPal wanted to become a mobile payments processor? How awareness of those plans helped Google?
I guess only the court will be able to answer those questions…
Sure, employees changing jobs like they did seems at least immoral.
Well, with any software development job, you almost invariably sign an agreement that survives your departure from the company that says you will not share that company’s trade secrets with a future employer. Actually, in most other states, PayPal would probably win. But courts in the state of California are often very unfriendly to non-compete clauses. It does seem like Google used some very underhanded business practices, and possible some illegal ones here though, to dupe PayPal into thinking they were going to sign a deal with them to use PayPal for online payments, luring some of PayPal’s top talent away, then using that talent to develop their own competing service and backing out of the deal they had lead PayPal to believe they were going to sign with them.
This one’s definitely going to be interesting. PayPal definitely has a legitimate case I think though.
Edited 2011-05-28 01:17 UTC
Which in some cases is effectively a restriction on a persons ability to seek alternative work in a related position or area where they have the most expertise.
It’s certainly more employee friendly, yes.
Why did you leap to that conclusion? All Google have done is to hire someone who used to work at another large company based in and around the Valley. That’s hardly a rare or special event. Unless Google specifically asked Bedier to spill the beans and provide intimate knowledge of PayPal, they haven’t done anything wrong.
Why would Google even bother to set up a “fake deal” in the first place? If they wanted to hire people to build Google Wallet they can advertise the positions, accept applications and hire suitable candidates. What benefit is it to Google to “pretend” to want to sign a deal? There is none.
Edited 2011-05-28 14:32 UTC
Not really. It’s more an issue of, if I am chemist at Coca-Cola, I can leave and go work for Pepsi. But I can’t share Coca-Cola’s secret formula with Pepsi.
Not “used to work”. They actively did work for PayPal while Google was trying to lure them away, at the same time that Google was actively trying to set up a partnership with PayPal. In addition, at least one of them actively worked for PayPal and Google at the same time according to the article. That’s clearly a conflict of interest given that Google was planning a competing product. That one’s not really even up for discussion.
Not saying they set up a “fake deal”. Only that actively working on a deal with a partner while at the same time, courting their top talent to come work for you, and then after you have managed to recruit their top talent, you back out of the deal and announce you are creating a competing product is shady at best. And possibly illegal. It’s likely there were at least some contractual breaches here regarding conflict of interest on Google’s part.
Edited 2011-05-28 14:51 UTC
Right, like I said, unless Google specifically asked Bedier to spill the beans and provide intimate knowledge of PayPal, they haven’t done anything wrong. Neither you nor I have any evidence either way that Bedier passed on information about PayPal to Google. Further more I suspect that PayPal have very little (if any) evidence, either.
Were either PayPal or Google aware of that, though? If not then neither company could be complicit.
Google and PayPal are essentially competitors for a long time now. Ever since Google created Google Checkout. Google couldn’t have had conflict of interest, they are not representing PayPal. That person was not working for both at the same time, he was being interviewed by Google while leading the negotiations with Google.
Other point, is that we know for sure that the negotiations were about PayPal being used for Android Market, not mobile payments. Yet PayPal complains about mobile payments.
There can’t be conflict of interest on Google part if Google isn’t contractually defending PayPal’s interests. PayPal’s negotiator had a conflict of interest, not Google.
I don’t understand all the fuss. Paypal is just another online money transfer. It’s not a “professional payment method”. I don’t buy something online if paypal is the only payment method. If an online computer part store doesn’t accept mastercard or visa then something is definitely wrong there.
Yes, it is a professional payment method. If you have a merchant account with PayPal, you can can accept Visa and Mastercard. And if you use PayPal’s API to do it, you can brand it with your own branding. You’ve undoubtably bought things online with your credit card where PayPal was the payment service, but you didn’t even realize it because the seller had a merchant account with PayPal and used PayPal’s payment processing API to provide their own Web front end to the service.
I;’ve done contract work for small companies where I have set up online store fronts and used PayPal as the credit card processing service. It’s usually cheaper than getting a merchant account with a traditional bank.
Pay pay is usually cheaper, unless the merchant is a legit company that does a decent (>200) number of transactions.
You do realize that your personal online buying habits are irrelevant to everyone else.
This may ruin Paypal’s ambitions to replace Western Union as the world’s No1 choice for small time money launderers, tax evaders and fraudsters. I’m just surprised that Paypal wasn’t closed down years ago for constantly breaking just about every consumer protection and banking law in existence.
While I agree with you, Paypal is not a bank and is not subject to the banking rules.
With all the shenanigans going on with Western Union, now Paypal, I can see the same nonsense happening with Google. These money transfer services need to fall under the same rules as the credit card companies.
Western Union and Paypal are used in too many scams, with zero consumer protection. What makes you think Google Wallet will be any better?
Google Wallet probably won’t be any better. That is why Paypal, Western Union etc should be required to have banking licences.
In Luxembourg PayPal is in the banking institution registry. Therefore I trust PayPal more than Google Checkout(which is 100% US based)
“Commencing 2 July 2007, as PayPal (Europe) S.Ã r.l. & Cie, S.C.A., PayPal moved its European operations from the UK to Luxembourg. As a Luxembourg entity, it is since regulated as a bank by the Commission de Surveillance du Secteur Financier (CSSF) and provides PayPal service throughout the European Union.”
You don’t want to see my Paypal transaction history. Thanks Paypal for providing me with infrastructure, without you I couldn’t support a green and environmentally friendly of growing pot at such a scale.
Yours truly,
Raheem, Harlem NY
PS My cell mate wants to say “hi”, too.
I never know who’s the good, the bad, or the ugly in the economic arena because I’m not interested in bullfights, cockfights, or circenses Romanos.
But I know what to think of PayPal since BBC wrote on 2010.1204:
I was just about to post something along those lines. Thanks. PayPal’s conduct in this matter is abhorrent. I do hope Google succeeds in invading their turf, and I don’t care how they do it. I trust Google more to withstand government censorship pressure than PayPal.
I hope PayPal wins myself, because Google is is simply getting to big and having way too much control over the Internet. Basically, rather than working with partners, Google is trying to create competing products for virtually everything. They have their fingers in too many pieces of the pie.
I also find it interesting that you trust Google more. I certainly don’t trust Google with my personal data. Not after they have pulled some of the things they have done in the past, like share it without my permission on Google Buzz, and collect WiFi data from their cars and then claim it was a “programming error and the data wasn’t supposed to be collected” yeah right… We believe that one. And then there is the fact that if you use GMail, Google’s ad system reads all of your personal email and collects data from it to send you targeted advertising. I don’t know about you, but I don’t Google’s software scraping my personal email and building a database of information about me so that it can send me targeted ads. Literally, if you use GMail, Google probably knows more about you than your best friends do.
As far as PayPal cutting off WikiLeaks, sharing classified government documents, even if you come across them accidentally, is illegal. The whole “Loose lips sink ships” thing. Also, I don’t know about you, but personally I find Julian Assange to be an extremely annoying and arrogant prick. Guy seems to think he is above the law and untouchable. Hopefully he will learn that he is not.
And granted the, accusations haven’t been proven true yet. But rape is a pretty serious crime.
Edited 2011-05-28 14:07 UTC
As far as PayPal cutting off WikiLeaks, sharing classified government documents, even if you come across them accidentally, is illegal.
Only if you’re American.
The whole “Loose lips sink ships” thing.
There was nothing of any real intelligence value in the material leaked material. It was simply embarrassing.
There is no higher crime than embarrassing a high ranking political or military figure. Just ask that poor fellow from England who’s still fighting extradition over the high crime of embarrassing the US military.
Why should an Australian citizen, not a US resident and a free person unbound by any oath to US be subject to US laws?
He may think whatever he wishes, but US law DOES NOT APPLY to him. And the pressure that Americans are exerting on other governments is just further proof that US is an imperialist country.
If you found secret Russian documents, would you return them to the Russian embassy? I bet not, because you are not a Russian citizen.(Change Russian to Chinese, if you’re Russian)
Well, it is teh internets vs jewmoney.
While I’d always defend your right to think in an US-centric style and, of course, everybody else’s right to think differently, i.e. globally, the axiology demonstrated here is quite interesting.
Assuming that most people on this planet share the view that it is wise to consider the legality of anything one does or omits to do there remains the question how wise it is to neglect any value not implicit to legality.
The regimes of Nazism, Stalinism, and Guantanamism ought to challenge all people with a legality-only approach to reality.
Really? You’re comparing Guantanamo Bay with the Nazi Death Camps? Soviet stalags? Gitmo is a problem, but let’s not get carried away here.
The same company that harvested wireless network traffic instead of simply recording MAC and SSID information.
A company who’s business is selling data procured through it’s various services; now your email, PIM, phone calling and financial transactions can all be analyzed together for a more complete data set sold off to every marketing and gov agency that comes knocking.
A US company who will quickly bend over the table and spread wide for any official looking person in a suit waving a government letterhead rather than a legally justified warrant. “what? It’s for the War on Whale Extinction? Shit. How much of our database do you need? Did you bring some DVDs?”
And, on an individual level, statistically some of the individual staff employed by Google will abuse there access to information.
I don’t really trust either company as the primary purpose of both is to manufacture profits for shareholders with whatever benefit they provide to me being a bi-product of the manufacturing process. At least with PayPal, there is some small separation between Google’s mega-database and my what few financial transactions I’ve used PayPal for.
Now you either wear a tin foil hat or not. If you do, this link won’t mean anything to you.
http://www.dataliberation.org/
And then they have their dashboard giving you full control of everything they have on you. Show which company has anything similar to that. They also have very clear policies. I know they collect contextual information to deliver targeted ads – and you know what, I prefer the non-intrusive (text based) ads they deliver, instead of purple banners trying to sell me bras at a discount in a store 5000 miles away. And if they don’t scan emails for specific keywords, how do you propose to deliver relevant ads? Reading people’s mind or what?
Yes, they made mistakes, but at least they were immediately cooperative with all investigations (wifi collection comes to mind). BTW, what’s with that? I mean people love to ride that old horse, but essentially what they collected is PUBLICLY AVAILABLE – you broadcast your SSID, I drive by your house and see it on my phone. There isn’t a single shred of evidence that they did or intended to do anything malicious with that information.
If the WIFI fiasco and the BUZZ is the only dirt you can dig up, I think they are doing fine. With facebook, for instance, you have ZERO control of your information. With GOOGLE, you can delete everything at a push of a few buttons. Now you can claim (tin foil hat on) that they don’t really do it and they lie, but than we can’t have an intelligent conversation, can we?
EDIT -> Forget to add – you said your data is sold to any marketing agency that comes knocking. WTF? That’s facebook. In case of Google, they are the marketing agency. They don’t need (indeed, it would be foolish) to sell your data to anyone, when it’s the backbone of Google’s success as a marketing company.
Edited 2011-05-29 16:20 UTC
No tinfoil hat here. Just a healthy consideration of what information I hand over and when the benefits do not outweigh the service provided.
Sure, they provide the mighty dashboard but what’s the data retention policy on what information you de-list (ie. “delete”). And you really think Google is not selling analysis to other marketing companies also?
The wifi indiscretion and the Buzz issue. How about Android; how much effort does it take to make use of the OS without feeding your information back up into Google’s servers?
And this still does not address the primary questions:
– Why should one trust a corporation who’s primary function is to manufacture profit? Exploitation of your information is just a CEO or market change away.
– Why should I rely on the Google provided services which I can easily provide through my own servers? Why involve a third party between me and my data?
Don’t get me wrong; credit where due. Speaking out against Internet censorship is fantastic even if it is a tactic intended to benefit Google’s commercial strategies.
I’m just saying that the default when dealing with companies this big should be skepticisms in general and minimal use of services when one must use them.
For me, the benefits far outweigh the “cost”. In fact, I don’t see the cost at all. I have yet to suffer any consequences for using google’s various services, and I do use quite a few: picasa, android, gmail, calendar, blogspot. So far they have done nothing to warrant my suspicion. Where I live, actually yahoo is the more popular company. I created an account there, but every time I log in (once a month perhaps) I cringe at the ad infested interface. Like it or not, adwords made the internet a better place for almost all of us. It does rely of automated scans of email contents to deliver targeted ads. But they are as non-intrusive as you can get – a few lines of text. No check yahoo mail to get some notion of how the internet looked like 10 years ago (only it was far worse).
They gave me the tools to see exactly how much information I provide to Google. I can remove them if I wish so. I don’t. They have some location info – and it is done the right way (ie it’s opt in in the case of Latitude for instance – I have to explicitely authorize people one by one to allow them to see where I am). The apps installed on my phone is also stored on google – but that’s how they provide another service: if I change my handset, they get automatically reinstalled and I don’t have to do it manually. This is valuable for me.
Well, why should anyone trust any corporation – all are after profite, aren’t they? Yet to simply exist, we need to use the services of dozens of corporation every day (unless we go and live in a cave or sth).
I see your point, but I don’t have my own servers. I could (geek here after all) – but I no longer have the time to set it up, and again, so far Google had done nothing that caused any kind of inconvenience. The other thing is that in the summer months, we suffer blackouts once or twice every week, than can last from an hour to as much as 12 hours. When that happens, I still have access to my mail, calendar, whatever through my phone (or even laptop using portable hotspot on my N1 and 3G). With running my own servers, this would not be the case. Not to mention the cost running my own. The price I pay right now is simply the few lines of text ads that I barely notice (and more often than not, they are even somewhat relevant).
Google is the only company that stood up against censorship in China. They had hoped that other companies would follow, but none did. Yahoo is actually praised by the local government (in Vietnam) for its cooperation with local agencies and following local laws. You know what that means, right? Google is not, but they are at least not blocked here (the Viet government is far less paranoid than the Chinese).
Now this is something I can agree with. I have local off-line backup of all important documents I create – be it articles I post on blogspot, pictures I choose to share on picasa, etc. Almost all stuff I have online through various Google services is already sth I chose to make public. The only “sensitive” information I have no choice but to trust Google about is my email. But I would rather trust google with my mail than Microsoft, Apple, or Yahoo, or small companies that can easily bought out or driven out of business.
Google right now is under intensive scrutiny from dozens of government agencies in a number of countries. That’s a good thing (a positive collateral from the wifi SNAFU). I don’t think they would risk their profitable business by shady deals with third parties. IE their legit business is already quite profitable, so they actually don’t need to go into deals like Facebook does (Zynga comes to mind). So yeah, I trust them for the time being, and despite some mistakes they made, I don’t see the smoking gun that would make me loose my trust. I agree that vigilance is prudent when it comes to companies handling your information – and believe me, I know exactly what I got to lose. Email would suck, but other than that, it’s not much. Yeah, and I would never solely rely on the cloud for documents or other forms of media I create, unless they are not important.
Edited 2011-05-30 03:33 UTC
I think that PayPal was just waiting to get a chance in hurling a suit towards big-G.
They see the ad giant getting more and more into their kingdom of payments and they know that any innovation that Google offers can be an instant success due to the pervasive presence of Google services in the lives of each webcommerce (and so paypal’s) user.
So that menace has to be stopped before it has any chance to spread.
i.e. call the sharks^H^H^H^H^H^Hlawyers!
Could be. My thinking on it is that Google has a massive amount of legal budget to throw at the court system though. We don’t even see Microsoft going head to head with Google in the courts and MS is probably one of the few that can top Google’s war budget. Taking Google to court is not something I see any company looking forward too.
This battle over controlling web payments is one of the most important ever for these businesses. Funny thing is, I’ve heard about so many problems with Paypal (without a proper greivance procedure) and I don’t trust Google with personal data either (your data is their business model). Oh well.