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James Perrin

Paypal Sues Google over ‘Google Wallet’

27th May 2011 News, Industry News 2 minutes to read

The search engine giant is no stranger to court room sagas, with plenty of investigations, probes and hearings over the last year or so [See: Google Readying itself for a Big Hit from US Regulators and Are Google Trying To Appease The Germans?].

It seems as though it’s not just privacy and advertising practices that governments and rival companies are concerned with. Reports today have revealed that eBay, and its online payment system PayPal, are suing Google over allegedly stealing mobile payment trade secrets.

Specifically the allegations are levelled at two former executives of PayPal, Osama Bedier and Stephanie Tilenius. They claim that both Beider and Tilenius, who were poached by Google, took with them trade secrets of the highly sought after payment system.

In particular, Beider, was a big hitter at Paypal. According to Paypal, he led the negotiations to take their payment system to the likes of Android – a huge deal that would have seen Paypal become the chosen payment platform for all smartphones using the Android operating system.

However, at the same time, Beider was headhunted by Google to become Vice President of Payments and finally took up the post in January of this year. They claim that this process of events – whereby Bieder started negotiations between Paypal and Android, only to leave Paypal and join Google, was part of the reason why they are suing.

Bedier has therefore been accused of “misappropriated PayPal trade secrets by disclosing them within Google and to major retailers”; this is on top of a number of other issues, including the breaking of contractual agreements with eBay from Tilenius for allegedly attempting to recruit Beider in the first place.

Mobile payment is predicted to boom around the world this year, and as a result many internet companies want to utilise the service – or be the first to do so. Yesterday Google revealed their payment system in the form of a free app called ‘Google Wallet’. Along with a consortium of financial intuitions including Citibank and Master Card, and mobile technology providers Sprint Nextel, Google wanted to be the first to spearhead the mobile payment market.

What is unclear is why Paypal took so long to file a lawsuit, especially if they had known their executive had been poached, taking with him all of their trade secrets. Why wait until Google actually release their product? Well, the speculative cynic would argue they wanted rain on Google’s parade. But surely it would have been worth nipping this in the bud as early on?

Ultimately though Google wanted to be the first, and thanks to Paypal’s delay, they were. Being first is everything and some may say that you can’t put a price on it, however for Google it would appear the cost of being first in this case could prove quite expensive.

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