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EBay sizing up Toronto for AI centre

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Saturday, November 18, 2017 – Page B1

E Bay Inc. is eyeing Toronto as a potential hub for an artificial-intelligence "centre of excellence," as the company looks to gain an edge in an increasingly competitive digital commerce marketplace.

"There's really a booming beginning of an ecosystem around AI, and AI is incredibly important to our company," eBay president and CEO Devin Wenig told The Globe and Mail this week. "... Google's put some stakes down here, Facebook's put some stakes down here, so we're looking at whether that's something we would do as well."

The commerce website and its subsidiaries, ticketing-resale marketplace Stubhub and the classifieds website Kijiji, run their Canadian operations out of Toronto, with about 250 employees. Mr. Wenig declined to provide more details about his "stealth mission" in the city this week, except to say that the city's AI infrastructure - as well as its talent, capital and startup ecosystem - had caught his eye.

The company has numerous engineering-and-development "centres of excellence" outside of its San Jose, Calif., headquarters, including in New York, Portland, Ore., and Israel, Mr. Wenig said. "The real question is," he continued, "will a 22-year-old hotshot engineer want to work there? That is the world we live in."

On Thursday, the company also announced an expansion of its partnership with Ottawa's Shopify Inc. that will allow the latter's merchants to list and sell their products on eBay's Canadian website using their Shopify account.

In a wide-ranging interview, Mr. Wenig discussed the company's strategy, its competition and its relationship with Canada.

Where is Canada in terms of growth in e-commerce versus the United States?

It's about half the e-commerce penetration. I do think it will change - it's changing everywhere in the world.

There's no particular reason. Technology is highly adopted here, broadband penetration is highly adopted. There's all the conditions for e-commerce. I don't think Canada's going to be immune to 30-, 40-, 50-per-cent e-commerce penetration rates eventually.

What's your relationship with Shopify?

What Shopify does is enable small merchants with tools and technology. What eBay does is build a global-scale marketplace. They're very complementary. That doesn't mean that in some areas we might not overlap, but in technology, there's nobody that's purely complementary; it's co-op-etition everywhere.

But with Shopify, I really see very little of it. Our job is to in many ways be a tech partner, to be a global marketplace and create demand.

How do you differentiate yourself from Amazon?

The world doesn't need an almostas-good Amazon; it needs a better eBay. For me, differentiation means three things. It means the inventory that people buy, the product experience that they buy it in, and the brand. In all three of those, we have pushed hard to be modern and inspiring and useful, but different.

Some people have a more historic view of what eBay does, but the majority of the time, you will find a better price on eBay than anywhere else. The product experience is a big evolution that we've been pushing, using structured data, building a catalogue. And the goal there is to make it simple, modern and inspiring.

You said people have a 'historic view' of the company. Why do you think that is?

I think we've allowed them to have that. We should look inside first; it's our job to make sure consumers know what we do. We've never really, until recently, been a brand advertiser. We've never, until recently, significantly changed the product experience. So I don't blame anybody other than ourselves. It's a great business and one of the great success stories in digital, but there's no doubt there's a brand gap. We're going to close that.

What are your thoughts on NAFTA and trade with Canada?

We are one of the world's largest facilitators of cross-border trade.

Whether it's rhetoric or policy, things that put friction in trade, we don't like. On NAFTA, I'm sure there are plenty of issues both ways. One of the things we would like to see is Canada relax its de minimis customs exemption of $20.

I don't think Canada understands the impact that that has on its small businesses. They say, 'It's low, therefore we're protecting our retail sector.' It also constrains exports of small businesses, because you're taxed on returns. Our merchant population in Canada, 99 per cent of them are exporters. They are selling half of what they could be because they will not sell something that might get returned.

Because if it's over $20, then it gets hit with a tariff. Canada should raise its de minimis customs exemption, and its small business sector will grow.

eBay's stock has risen more than 25 per cent since the end of July, 2015, the month you became CEO and PayPal was spun off - but PayPal's stock has almost doubled in price since then. How do you feel about the spinoff now?

I think focus is a good thing. PayPal is a payments business that is more and more like a financial service business, and they're doing a great job. But that isn't what we do. We allow merchants on eBay to pay and get paid. That's different from being in the payments business, where you are enabling payments outside your own ecosystem. At the point that that business got bigger than enabling business on PayPal, it started to become a very different company. And it's working for them, but it wasn't our company.

This interview has been edited and condensed.

Associated Graphic

Devin Wenig, president and chief executive officer of eBay Inc. - seen in May at a conference in California - says the world doesn't need an Amazon clone; it needs a better eBay.


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