Theft and Betrayal: PayPal Sues Google Over New ‘Google Wallet’
- Posted on May 27, 2011 at 8:26am by
Jonathon M. Seidl
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NEW YORK (The Blaze/AP) — Google Inc. hopes to nudge consumers and merchants into a world where the smartphone has replaced the wallet as the container for credit cards, coupons and receipts.
(Read our original report on Google Wallet.)
While it tackles that challenge, Google also will have to spar with the biggest online payment service, eBay Inc.’s PayPal, in a legal battle that could be filled with corporate intrigue.
After Google unveiled its tap-to-pay technology in New York on a smartphone equipped with its Android software, PayPal struck back in a California court with a lawsuit alleging the service is the byproduct of intellectual theft and betrayal.
The central figure in the 28-page complaint is Osama Bedier, now Google’s vice president of payments after spending nine years at PayPal. He was part of the team that showed off a new service called “Google Wallet.”
The suit alleges Google hired Bedier four months ago primarily to pick his brain and steal PayPal’s trade secrets for its new phone-as-a-wallet service.
PayPal alleges Bedier put the latest information about PayPal’s mobile payment strategy on his own computer just before he started his new job at Google. The suit also names a former eBay executive, Stephanie Tilenius, who went to work for Google in 2009 and began to woo Bedier last year. Tilenius, Google’s vice president of commerce, also appeared at the New York event to tout the benefits of Google Wallet.
“Sometimes the behaviors of people and competitors make legal action the only meaningful way for a company to protect one of its most valuable assets – its trade secrets,” PayPal wrote on its blog Thursday.
Google spokesman Aaron Zamost said the company isn’t commenting until it has had more time to review the suit.
Luring Bedier away from PayPal was so important, according to the lawsuit, that both Eric Schmidt, then Google’s CEO, and co-founder Larry Page met with him last fall. Page has since replaced Schmidt as CEO.
Google made its first formal job offer to Bedier on Nov. 12, according to the lawsuit, which was filed in Santa Clara County Superior Court. That was just three days before Schmidt appeared at a technology conference and talked about the possibility of Google creating a phone that could supplant wallets.
In Google’s vision detailed Thursday, shoppers will touch their phone screen to select a card, then tap the phone to a credit-card reader in a store or restaurant. Google would make money by selling coupons and advertising that come along with the experience.
It’s a goal shared by PayPal and others. The Internet search and advertising company also faces tough competition from cellphone companies and payment card issuer Visa Inc. All of them want to play the central role of tying together phones, retailers and banks into a new payment system.
This isn‘t Google’s first attempt at electronic payments. The company introduced an online payment service called “Checkout” five years ago. It hasn’t posed a serious threat to PayPal.
Google views its digital wallet as a way to sell advertising at a pivotal moment: when shoppers are in stores, ready to spend money and even more receptive to coupons and other discount offers.
Nick Holland, an analyst at Yankee Group, said that although all parties stand to benefit from Google’s system, Google itself has the most to gain. That’s because the Google Wallet would allow the company to “own” the market for advertising that‘s tied to the user’s location.
Google said it’s launching a Google Wallet trial in San Francisco and New York in cooperation with Visa rival MasterCard and Citibank. It will open up the system to consumers later in the summer. It then plans to expand across the country.
There has been talk of smart payment systems for years, and Google faces the same hurdles that have stifled previous trials.
One is that Google Wallet will initially work on only one smartphone, the Google Nexus S 4G carried by Sprint Nextel Corp. Several smartphone makers, including Research In Motion Ltd., maker of the BlackBerry, are ready to bring out more phones with chips for so-called Near-Field Communications, or NFC, but it‘s uncertain if they’ll work with Google’s system.
Another hurdle is getting retailers to invest in terminals that can talk to the phones. Google Wallet will connect only to MasterCard PayPass terminals. There are more than 135,000 of those in U.S. stores and restaurants, but that’s only a small fraction of the total number.
Google’s carrot is that retailers will be able to put loyalty cards and coupons in the Wallet, helping them track and engage with their customers. Partners in the trial include Macy’s, RadioShack, Subway, Toys R Us, Duane Reade and Walgreens.
Yet another problem: Google needs to get cellphone companies on board. Its partner Sprint is the country’s third-largest. AT&T Inc., Verizon Wireless and T-Mobile USA, the rest of the four biggest national carriers, have formed their own consortium to create a wallet that will compete with Google’s.
The final obstacle is persuading consumers to take the leap. Phones might one day offer slightly faster checkouts, but the benefit would be small. Google calls Wallet a “single-tap solution,” but in a demonstration Thursday at Google’s New York office, a Google executive had to tap his phone twice to a terminal provided by retail partner American Eagle Outfitters Inc., then sign on the screen to get a purchase of a pair of denim shorts through.
The Wallet will initially work with a MasterCard from Citigroup Inc. and with a prepaid debit card issued by Google, but the intent is to let the Wallet accept any card.
“This is about creating a compelling model and asking folks to join,” Bedier said Thursday at the New York event.
Banks and payment processors such as MasterCard and Visa like the idea of mobile payments, but have their own designs on the space. Visa already has announced plans for its own wallet. MasterCard is collaborating with Google but is working on its own projects.
“Today’s announcement is another early salvo in what will be a long and hard-fought battle to change consumers’ payment behavior and, as a potential result, the makeup of the payments landscape,” said Forrester Research analyst Charles Golvin.
You can read PayPal’s entire lawsuit here.
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Comments (58)
endgamer
Posted on May 27, 2011 at 8:16pmI believe Google is wrong BUT this type of thing happens all the time. I remember an audio speaker company called Mirage had a similar issue with Definitive Technology who picked the brains of a former mirage engineer. Definitive Technology developed some of the best bi-polar audio speakers ever shortly after that. I think that we need more competition and even though there were scrupulous issues here Google wallet and PayPal; can co-exist. However, IF Google indeed did STEAL their Technology then Google can face the consequences.
Report Post »Eblaze44
Posted on May 27, 2011 at 1:18pmMoney, unless it is actually gold or silver (maybe platinum), isn’t worth anything – it’s a concept – even when you hold a greenback dollar bill in your sweaty palms – it‘ isn’t money and is “virtually” worthless. what we call money is simply a means of transaction. Let’s say a pound of rice is valued as two pounds of carrots, each of which is valued at $1. instead of lugging around two pounds of carrots – which the rice seller may not want, we give him a dollar and take our rice home. the rice seller really wanted three pounds of onions, which is valued at two pounds of carrots. the rice seller can now take his dollar and give it to the onion merchant and he doesn’t have to accept the carrots, which might rot, nor does he have to lug them over to the onion dealer, who also might not want two pounds of carrots. but in and of itself, that dollar has no value – it represents value. To a collector of dollars – it may have some value – as it might if it was actually made of gold or silver.
Report Post »Eblaze44
Posted on May 27, 2011 at 1:10pmIt’s time to boycott eBay and PayPal.
Report Post »p00gles
Posted on May 27, 2011 at 12:36pmHope PayPal looses, they love holding my money for now good reason then stealing 10% or so of it before they decide to give it back to me.
Report Post »caprica
Posted on May 27, 2011 at 12:21pmOsama bedier……another muslim ….watch him whom is he sending the money too
Report Post »Always ask for reciept at the Gas Station and 7 Eleven ……..the arabs unsing our money to arm themself ……so always ask for receipt ….especially if you pay cash
RightPolitically
Posted on May 27, 2011 at 10:59amOsama lives…..how perfect is this!
Report Post »NOBALONEY
Posted on May 27, 2011 at 10:52amBackstabbing has become one of the fine arts in this sick world.
Report Post »powhatan
Posted on May 27, 2011 at 10:30amIt will not be long…where all of our transactions will be going through this, and the govt. will be running it……just wait
Report Post »powhatan
Posted on May 27, 2011 at 10:29amA guy named Osama is a liar and a thief…go figure…
Report Post »Bhaub
Posted on May 27, 2011 at 10:22amEh, PayPal doesn’t have much of a case. Swiping your phone instead of a credit card isn’t the same as using PayPal *instead* of a credit card. You use PayPal for electronic purchases, not physical ones. Ah well.
Report Post »beverlee
Posted on May 27, 2011 at 10:16amI will use cash and checks until they pry them from my cold, dead hands! Just call me an old fashioned girl! LOL!
Report Post »Master_Mason
Posted on May 27, 2011 at 9:43amI don’t trust Google and never will. I use StartPage which does not record your IP address or searches unlike spooky Google. I will never use anything even remotely related to Google even though it’s becoming difficult to do.
Report Post »inpennanow
Posted on May 27, 2011 at 7:24pmThough Start Page is “enhanced by Google.” Can’t get away from them.
Report Post »tommyg524
Posted on May 27, 2011 at 9:36ampaypal is a joke and a rip off, i have heard many stories of them ripping off the public, i myself was ripped by them, im just glad it was on a low dollar amount,cuase like any sociopathic corporate entity, they get to walk, and remain blameless, because coprorations have lawyers and the general public cant afford same. lawyers and lobbyists run the u.s., yes small caps here, and they always will. elitists are the problem, not necessarily party affiliation. the elitists own the politicians and us, all of us. but back to paypal, dont do business with them, they will nail you one way or another. go google !
Report Post »ADNIL
Posted on May 27, 2011 at 3:14pmI signed up for paypal last October. My January debit card statement revealed that my account had been fraudulently cleaned out with charges to (of all places) the Calvin Klien on-line store the middle of December. Merry Christmas! to someone, not me! Luckily, It was a card I kept a limited amount of money in exclusively for on-line purchases but it was still a couple hundred bucks. It took a while and some aggravation to get it back.
Report Post »Danang1972
Posted on May 27, 2011 at 9:29amNot too far away – Excuse me, do I need two forms of ID to use cash?
Report Post »vennoye
Posted on May 27, 2011 at 9:16am“helping them track and engage with their customers”
Now that is a phrase that really makes you want to jump right in on this, isn’t it?????? All I want to do is give someone another opportunity to track what I am doing!!!
Report Post »jado1981
Posted on May 27, 2011 at 9:00amThis wont stick. AT&T, Verizon, and T-Mobile USA (which is now AT&T), are joining together to combat this. They won’t go along with google/sprint. I’m staying away from this thing, it’s never been that big of a deal for me to use cash, as Dave Ramsey says, I’M DEBT FREE! You won’t find me using this garbage.
Report Post »Captain Crunch
Posted on May 27, 2011 at 9:34amCash will soon be illegal. A national security threat. We might buy illegal light bulbs on the street.
Report Post »Redistributor
Posted on May 27, 2011 at 8:53amThis is great technology…can’t wait for it! Sounds like paypal may have a case though but I’m sure Google will probably settle and still introduce the wallet to the market.
Report Post »foobear
Posted on May 27, 2011 at 8:59amThe claim that a virtual wallet is somehow patentable is absurd, as is the notion that google wouldn’t be able to engineer their own online payment service.
Software patents in general are an absurdity, and should be eliminated.
Report Post »Ebbertron
Posted on May 27, 2011 at 9:04amawesome….right up until you lose your phone. Then what? you’re S.O.L.
Report Post »Bryce
Posted on May 27, 2011 at 9:38am@Ebbertron
Report Post »What’s the difference between losing this and losing a credit card? I’ll tell you. you can wipe the phone remotely. The card? not so much.
jim
Posted on May 27, 2011 at 8:46amMoney to Google services goes straight to their favorite charity… the Muslim Brotherhood.
Report Post »@ Coyote2
Posted on May 27, 2011 at 9:16amGoogle is a jew outfit.They will keep it for themselves.
Report Post »Money is apparently the jews God. They seem to worship it more then any thing else.
TRILO
Posted on May 27, 2011 at 8:42amWho in their right mind would trust these people with this kind of technology. Was it not Google who was driving around communities across the globe illegally getting information from people’s wireless networks and just recently we found out they were tracking and storing our every move?
Report Post »turkey13
Posted on May 27, 2011 at 9:35amYou are right, Google is the left hand for the government. They just send all your information to the Democratic party. I use Yahoo because I use Aol on dilaup and it uses Google.
Report Post »nomercy63
Posted on May 27, 2011 at 8:41amGoogle Sucks it is becoming a Government instrument for tracking the people! There are other search engines to use.
Report Post »heavyduty
Posted on May 27, 2011 at 8:41am666 comes to mind as far as I am concerned.
Report Post »Watcher47
Posted on May 27, 2011 at 10:43amYep! You can loose your cell phone….but wait, just implant this little chip in your hand….oh wait, they are already doing that in Europe……
Report Post »Sinista MACE
Posted on May 27, 2011 at 8:35amGoogle works for the NSA/CIA/FBI.
Nothing’s gonna happen to Google. They get to violate the law openly because they work with open violators of the law in our intelligence community.
If they can steal my wireless data and nothing happens, what does PayPal think is gonna happen…nothing.
It’s corrupt NSA Keyword and spying software.
Sue the NSA/FBI/CIA.
Then ABOLISH THEM. They’re churning out traitors and false-flag terrorists.
Report Post »David, the Constitutional Libertarian
Posted on May 27, 2011 at 8:34amVirtual money, great idea! /s
Report Post »Snowleopard {gallery of cat folks}
Posted on May 27, 2011 at 9:06amOnly a matter of time, after all, the government and the fed’s have been using such for a number of years now…so why not the rest of the world?
Report Post »burned at edges
Posted on May 27, 2011 at 9:20ambefore you know it banks are going to charge to hand out actual physical cash…just like getting your check copies. Would you like to download your cash into your phone, or get $100 cash for $105 getting deducted from your account?
Report Post »jb.kibs
Posted on May 27, 2011 at 9:40amvirtual money is what is going to ruin this world. not country, world. “virtual money” do you even hear what you just said, virtual literally means ‘Not Real’ so .. you want ‘Not Real’ money.. cool, you can have it ALL. have fun.
Report Post »TomFerrari
Posted on May 27, 2011 at 9:55amSTOLE the TECHNOLOGY??
Let’s see – a g-force sensor is in the phone with accessible API’s.
This activates the “app”.
The app searches for a merchant terminal in range.
The app and the terminal exchange communications protocol information.
The terminal asks the app for authoriazation to charge a credit card.
The app sends actual credit card information over the internet to the credit card company
(Just like buying something online)
and gets authorization from the CC company.
The app passes the authorization along to the terminal.
So, what’s to steal?
It’s NOT ROCKET SCIENCE!
Japan has been using this for YEARS – ON THEIR PHONES.
Google it.
You can buy a soda from a vending machine using your phone.
Ebay will lose this one.
I agree Google may be getting too invasive in our lives, but, they are good at what they do.
Report Post »Let’s just be sure we dislike their ACTIONS, not their success.
@ Coyote2
Posted on May 27, 2011 at 11:22amIt’s not real money, just “created” money like what the “Federal Reserve” creates out of thin air with a few strokes on a computer. Just something more for the greedy jews to charge usury on. Jesus threw the greedy bastards out of the temple once for this and He will do it again.Soon, I believe.
Report Post »NOTAMUSHROOM
Posted on May 27, 2011 at 8:32amStay away from Google. They’d becoming the new SS. As in Nazi SS.
Report Post »@ Coyote2
Posted on May 27, 2011 at 8:52amBoth of them are jew outfits.Greed for money appears to be the motive.
Report Post »huufarted
Posted on May 27, 2011 at 9:35am@Coyote do you work hard at being an ass or does it come naturally ?
Report Post »jb.kibs
Posted on May 27, 2011 at 9:39amit’s true too. Google is blatent about their hate for America, you can tell with the Google Doodles. they give themselves away. they have a socialist agenda.
Report Post »@ Coyote2
Posted on May 28, 2011 at 11:03am@HUUFARTED,
Report Post »I learned everything I know from reading hate filled jew posts.
let us prey
Posted on May 27, 2011 at 8:32amThe fight to determine who will fund the arab spring.
Report Post »poverty.sucks
Posted on May 27, 2011 at 8:44amOsama Bedier, trust worthy name.
Report Post »biohazard23
Posted on May 27, 2011 at 8:52am@poverty.sucks, I was thinking the same thing.
Report Post »Snowleopard {gallery of cat folks}
Posted on May 27, 2011 at 9:05am@Let us prey:
The case to see who will pay for the next ‘arab spring’ for here in America with Obama admin.
Report Post »sissykatz
Posted on May 27, 2011 at 9:08amWhat ever happens I hope Google doesn’t win. They have way too much power. I don‘t know about you but although I do like technology I really don’t like the Idea that someone knows every move I make, every website I visit, can show anyone right to my front door, knows evey purchase I make, Orwell would have a stroke,,, this is “Big Brother” on steroids.I could never have imagined just how far Big Brother could and Would go. Makes me a little uncomfortable.. or a Lot uncomfortable.
Report Post »sWampy
Posted on May 27, 2011 at 9:19amIt just makes me sick that any of these companies and the government think you should be able to copyright/patent stuff that has been around for thousands of years just because you can now do them on the computer. None of these ideas are new or novel, non need protection, the only people protected are the billionaires, we should shut down the patent office, hang all the patent attorneys and then hang all the attorneys that try to save the patent attorneys.
Report Post »grandmaof5
Posted on May 27, 2011 at 9:21amSISSYKATZ, I agree. I wouldn‘t trust Google to handle the money I don’t have if they offered to pay me. I just love these companies who use the capitalist system to exist and grow and then turn into socialist/marxist/communists. Of course, like was mentioned earlier “Osama” is not a name I will ever trust. Hope you are feeling well and kitties are good. All is good here – just hot.
Report Post »SNOW, morning, don’t know if you saw my earlier greeting but hope you are feeling better.
poverty.sucks
Posted on May 27, 2011 at 9:22amAnother Osama in charge of payments?
Report Post »Bryce
Posted on May 27, 2011 at 9:34amI’m sorry, but the moment the internet came into being, this was bound to happen. People, it seems, will almost always trade privacy for convenience. Honestly, if you’re really worried about your privacy I would be more concerned about Facebook. I still use google, simply because they don’t have any more info on me than what can already be had from a phone book. I quit facebook (and any social media for that matter) a couple of months back, simply because those sites are all about gathering useful details about your life that could be used against you, and because I hate long distance relationships (which facebook makes you feel obligated to maintain)
Report Post »jb.kibs
Posted on May 27, 2011 at 9:36amOsama Bedier? … this is the kind of douchebaggery that makes the world so lame…
how many people are named Adolph that you know?
Report Post »jb.kibs
Posted on May 27, 2011 at 9:38amso now when you lose your phone you lose your credit accounts, checking accounts, savings accounts.. not to mention smart phone viruii that will steal all this information all too easily. Good luck to any id10t that uses these apps…
Report Post »TomFerrari
Posted on May 27, 2011 at 9:49amoff topic
Report Post »IvanK
Posted on May 27, 2011 at 10:53amGoogle’s motto: “Do no Evil” – except of course unless there’s profit involved for us.
Report Post »In other words, We have have so much money and power now – Evil is in the eye of the beholder.
Don’tcha just love liberals?
VegasGuy
Posted on May 27, 2011 at 11:24am@poverty.sucks, the same exact thought crossed my mind, too.
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