May 27th, 2011

PayPal sues after Google announce wal­let app

PayPal and its par­ent com­pany eBay are suing Google and two of its employ­ees for mis­ap­pro­pri­at­ing trade secrets and viol­at­ing terms of employ­ment, after Google unveiled their NFC-​based (Near Field Com­mu­nic­a­tion) Google Wal­let app and sup­port­ing stake­hold­ers and processes.

Google Wal­let, which was announced on Thursday, is cur­rently being “field-​tested”. Ini­tially it will be avail­able only in the US, although, if suc­cess­ful, could be rolled out globally.

At launch, the app will sup­port both the Citi Mas­ter­Card and a Google Pre­paid card. Besides Citi and Mas­ter­Card, First Data (pay­ment pro­cessing) and Sprint were also revealed as partners.

Google Offers was also announced at the event, which appears to be a Groupon-​style con­sumer dis­count scheme linked to Google Wallet.

The main focus of PayPal’s legal action, which they pub­li­cised, is a Google exec Osama Bedier, who was VP of plat­form, mobile and new ven­tures at PayPal before he was recruited to a sim­ilar role at Google in Janu­ary 2011.

The main points of PayPal’s argu­ment are:

1. Google allegedly approached Bedier to work for Google last year via Face­book. PayPal claims that this viol­ated a con­tract between an ex-​PayPal, now Google, employee and PayPal, and that this occurred whilst nego­ti­ations between Google and PayPal to work with each other were ongoing.

2. PayPal alleges that Bedier used his email and Drop­Box to keep key PayPal stra­tegic doc­u­ments before he left.

3. PayPal also allege that since Bedier joined Google he has both made use of PayPal trade secrets in sales calls to retail­ers and tried to recruit other PayPal employ­ees in breach of his contract.

PayPal wants the court to pre­vent fur­ther mis­ap­pro­pri­ation of its secrets and award com­pens­at­ory and pun­it­ive damages.

This action appears to illus­trate both the determ­in­a­tion of Google to go it alone, rather than work with PayPal and the import­ance that Google places on the poten­tial of the mobile wal­let market.

Some mobile devices such as the Nexus S already have the NFC tech­no­logy required for mobile wal­let func­tion­al­ity and spec­u­la­tion has increased that other Android-​based device man­u­fac­tur­ers and Apple are plan­ning to intro­duce NFC-​based devices in the near future.

Video of the Google event avail­able here: Google announce Google Wal­let and Google Offers

Leave a Reply