PayPal, eBay Cry Foul over Google Wallet; Google Cries No Foul

May 28, 2011

Google very recently moved a step closer to its vision of an open commerce ecosystem when it announced Google Wallet and Google Offers–and the whole Android world was elated because Google Wallet’s maiden voyage will be sailing on an Android device from Sprint–the Samsung Nexus S 4G. Google Wallet is expected to open this summer.

And, long before Osama Bedier could say, “Welcome to Google Wallet,” PayPal and eBay were all ready, hot on Google’s heels, and slapped Google with a 28-page lawsuit filed in a California state court right on the same day as Google’s announcement. PayPal is an online financial services subsidiary of eBay.

Citing “misappropriation of company secrets” and “break of fiduciary trust,” PayPal is pointing its guns at former PayPal employee, Osama Bedier, who was among PayPal’s top brass for about 9 years (from 2002-2011). Bedier has been Google’s helmsman for Google Wallet since January this year.

According to PayPal,

“Bedier and Google have misappropriated PayPal trade secrets by disclosing them within Google and to major retailers.”

The complaint said that

“Bedier transferred up-to-date versions of documents outlining PayPal’s mobile payment and point of sale strategies to his non-PayPal computer just days before leaving PayPal for Google on Jan 24, 2011. On information and belief, Bedier had already decided to move to a job at Google when he did this, and he had no legitimate reason for obtaining an update on PayPal’s strategies…PayPal is informed and believes and on that basis alleges that during…sales efforts, Bedier has been and is improperly comparing Google’s products and services with PayPal’s products and services in discussions with customers that both PayPal and Google are courting. In particular, on information and belief, Bedier’s comparisons incorporate PayPal trade secrets, including PayPal’s schedule for deployment, anticipated features, and back-end approach to mobile payment, point of sale, and the benefits of a wallet in the cloud.”

PayPal’s complaint also involves another former PayPal executive Stephanie Tilenius, who is now Google’s VP of E-Commerce. She was alleged to have “poached” and recruited Bedier, and thus allegedly broke contract obligations.

But, search giant Google apparently won’t take all these sitting down. In an emailed statement to TechCrunch, a Google spokesperson said,

“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.”

PayPal’s claim against Bedier and Google, if true, is a gravely serious one. Will Google’s latest legal entanglement cause Google Wallet to never open this summer? We’ll have to wait and see.

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