Amazon Sues to Block Exec Defection
It may not have the makings of a Tom Clancy thriller, but the legal battle between Amazon.com and a key former employee with plans to defect to eBay adds another plot twist to the rivalry between two of the biggest competitors in online retailing.
Amazon last month filed a complaint in the U.S. District Court in Seattle asking it to prevent Christopher Zyda, a three-year veteran who had served as Amazon.com Internationals treasurer and chief financial officer, from joining eBay. The online auction firm said Zyda has accepted a position as its vice president in charge of financial planning and analysis and investor relations.
Zyda "was - and is - uniquely familiar with Amazons most confidential financial data, financial plans, cost and pricing information for both vendors and customers, and the companys short and long-term business strategies," Amazon said in its Sept. 17 complaint, in which it described Zyda as a member of the companys innermost circle of executives.
"Zyda had high-level access to some of Amazons most confidential proprietary and trade secret information," the company said. "This information is not generally available to those outside of Amazon, and even within the company was accessible only by a limited number of senior executives."
Zyda, who is in the process of relocating from the Seattle area to Cupertino, Calif., could not be reached for comment. Amazon did not return calls for comment.
In what was intended as a pre-emptive strike to prevent Amazon from holding up Zydas employment, Zyda and eBay filed their own petition in a California court on Sept. 16. But U.S. District Court Judge Barbara Rothstein gave the first round to Amazon, issuing a temporary restraining order that prevents Zyda from working for eBay until the suit is discussed at on Oct. 9 hearing.
Although Amazon made a name for itself as an online book, music and video retailer while eBay rose to prominence as an online auction service, the two companies business models have begun to intersect in recent years, as each moves to exploit their loyal following of customers.
In addition to its retail outlets - Amazon now sells everything from toys to consumer electronics - and its zShops store hosting service, Amazon also has its own online auction service. EBay has a store hosting service, launched this year, and offers fixed-price goods through its Half.com subsidiary.
"EBay competes directly with Amazon for consumers and resellers who use the Internet to purchase and sell new and used retail goods," Amazon said.
But eBay said Amazon is just one of the many thousands of competitors it faces in both the online and offline world, according to Kevin Pursglove, an eBay spokesman. "Theres been an attempt to lump Amazon, eBay and Yahoo! all into one hat because were all on the Internet," Pursglove said Monday. "But weve always made it clear the competition, as far as were concerned, involves every other Internet site, as well as every firm that helps people buy offline."
As to Amazons claim that Zydas employment by eBay "threatens a misappropriation of Amazons confidential information and trade secrets," Purslgove said: "Our position is that we do respect the trade secrets of a third party. Were confident that we can work things out."
Ironically, Amazon is no stranger to disputes involving confidentiality agreements and former employees. When it began to build its own warehouse system, Amazon and its Drugstore.com affiliate hired 15 executives from Wal-Mart Stores with knowledge of the retail giants information systems. That prompted a trade-secret lawsuit in January 1999 by Wal-Mart. It was settled in April 1999, with Amazon agreeing to reassign several of the key employees.