Item 1. BUSINESS

Overview

eBay Inc. was formed as a sole proprietorship in September 1995 and was incorporated in California in May 1996. In April 1998, we reincorporated in Delaware, and in September 1998, we completed the initial public offering of our common stock. Our principal executive offices are located at 2025 Hamilton Avenue, San Jose, California, 95125, and our telephone number is (408) 376-7008. Unless otherwise expressly stated or the context otherwise requires, when we refer to “we,” “our,” “us,” or “eBay” in this annual report on Form 10-K, we mean eBay Inc. and its consolidated subsidiaries.

eBay is a global commerce leader through our Marketplace platforms which connect millions of buyers and sellers in more than 190 markets around the world. The platforms include our online marketplace located at www.ebay.com and its localized counterparts, including off-platform businesses in Japan and Turkey, as well as eBay’s suite of mobile apps. Our platforms are accessible through an online experience (e.g. desktop and laptop computers), iOS and Android mobile devices (e.g. smartphones and tablets) and our application programming interfaces (“APIs,” platform access for third party software developers).

Notably, on June 24 , 2021, we completed the sale of our Classifieds business to Adevinta ASA (“Adevinta”) for $2.5 billion in cash, subject to certain adjustments, and 540 million Adevinta shares, and on November 18, 2021, eBay completed the sale of approximately 135 million shares of Adevinta to Astinlux Finco S.a.r.l. (“Permira”) for approximately $2.3 billion in cash. Further, on November 14, 2021, we completed the sale of 80.01% of our ownership stake in eBay Korea LLC to E-mart Inc. (“Emart”) for approximately $3.0 billion of gross cash proceeds subject to certain adjustments.

Our Strategy

As a global commerce leader and third-party marketplace, our technologies and services are designed to provide buyers choice and a breadth of relevant inventory from around the globe, and to enable sellers’ access to eBay’s 147 million buyers worldwide. Our business model and pricing are designed so that our business is successful when our sellers are successful. We earn revenue primarily through fees collected on paid sales, payment processing and first-party advertising.

eBay’s strategy is to leverage technology to enhance the marketplace experience for our customers to drive growth in Gross Merchandise Volume (“GMV”), while increasing the rate of revenue growth through our managed payments and advertising initiatives and delivering healthy operating margins. In 2020, we embarked on a multi-year journey to build more compelling category experiences for enthusiastic consumers, to become the partner of choice for sellers and to strengthen trust in relationships with buyers on our platforms. We derived a majority of GMV in 2021 from the following product categories — parts & accessories, consumer electronics and home & garden.

During 2021, we completed the migration of eBay’s managed payments in all markets, delivering buyers and sellers a simplified end-to-end payments experience. Through managed payments, we are able to provide a frictionless experience for current and next-generation customers, consistent with today’s retail standards. We offer buyers more flexibility and choice in how they’d like to pay and offer sellers a more streamlined way to run their businesses.

Our advertising business remains focused on growing our Promoted Listings offerings (our first-party advertising products) while reducing non-strategic, third-party advertising. In 2021, we launched three new products: Promoted Listings Express (a cost-per-acquisition product for auction listings), Promoted Listings Advanced (a cost-per-click product) and External Promoted Listings (an off-platform advertising product). These new products complement our existing first-party advertising offering, Promoted Listings Standard (a cost-per-acquisition product for fixed-priced listings). Through our portfolio of Promoted Listings offerings, we are providing sellers with data-driven recommendations to optimize their conversion and drive velocity, while testing and building more technology features to drive growth, position eBay as the seller’s platform of choice and surface relevant inventory to buyers.

Our Customer Offerings

We provide a number of features for our sellers and buyers that align with our approach to becoming the partner of choice for sellers and building life-long, trusted buyer relationships. These offerings are designed to build trust and confidence on our platform and drive GMV.

To become the partner of choice for sellers, eBay continuously invests in technology to enhance the selling experience and products to grow the seller tools ecosystem. The new unified listing experience offers an intuitive and cohesive design across all platforms — desktop, mobile and app — simplifying the listing flow and enhancing seller benefits. Using computer vision technology, we launched a tool that allows sellers to scan select trading cards using eBay’s mobile apps to create a listing in less time. eBay expanded the Promoted Listings offerings to make it easier for sellers to drive velocity. We also launched personalized tools, such as coded coupons, to support a richer online seller experience. Coded coupons make it possible for sellers to personalize and distribute offers to their target customers, and 6.2 million unique buyers have made purchases using coded coupons and 69 thousand sellers have made sales with the use of coded coupons since launching in early 2021. In addition, all Seller Hub users are able to access Terapeak Product Research for free across a number of our markets — U.S., U.K., Germany, Australia, France, Italy, Spain and Canada — providing pricing insights and listing quality reports without any barriers.

In order to further strengthen our buyers’ confidence and trust in our services, we offer “eBay Money Back Guarantee,” which allows buyers to receive their money back if the item they ordered does not arrive, is faulty or damaged or does not match the listing. eBay Money Back Guarantee covers most items purchased on the eBay platform in the U.S., the U.K., Germany, Australia, Canada, France, Italy and Spain through a qualifying payment method. In 2021, eBay expanded "Authenticity Guarantee," an independent authentication service, to more luxury categories and more markets. We now authenticate watches sold over $2,000 in the U.S., the U.K. and Germany; select sneakers sold over $100 in the U.S., U.K., Germany, Australia and Canada; and select handbags sold over $500 in the U.S. Additionally, to meet consumer demand for top products, we expanded our eBay Refurbished offering, a dedicated destination that brings inventory from pre-selected brands and top rated sellers with standardized condition grading.

eBay also invests in product experiences that delight our customers and enhance the buying experience for our enthusiasts. Our Collection tool allows enthusiasts to view, manage and to track the value of their trading card collection. eBay has increased the tools available for our Motors enthusiasts by expanding the My Garage feature to Canada, Italy, France and Spain and adding a motorcycle parts finder to the fitment shopping experience. In the U.S., we added our entire parts and accessories inventory to the eBay Motors app, making it easier to find the most relevant inventory.

Our Impact and Responsibility

eBay’s purpose is to empower people and create economic opportunity for all through our technology for our global community of users. Every day, people build businesses on our platforms. With a low cost of entry for sellers, we offer a highly accessible way for all types of users to interact in a global marketplace that’s inclusive and connects people of all backgrounds. Accordingly, we prioritize our corporate responsibility efforts to impact the areas of economic empowerment and sustainable commerce. Key economic programs include eBay for Charity, the eBay Foundation and our small business enablement efforts, such as our Up & Running Grants program.

eBay for Charity empowers buyers and sellers to support charities around the world. In 2021, eBay for Charity matched donations made to Direct Relief and partnered with OXFAM, Make a Wish Foundation, Stop AAPI Hate and The Andy Warhol Foundation. In 2021, more than $145 million was raised by buyers and sellers to support charities via eBay for Charity.

The eBay Foundation helps to build economically vibrant and thriving communities. During 2021, the eBay Foundation granted over $14 million to support historically excluded entrepreneurs and our employee gift-matching program. The eBay Foundation also increased our employee gift-matching annual cap to $10,000 per employee, per year. To date, the eBay Foundation has awarded more than $76 million to more than 1,800 nonprofits.

In 2021, eBay committed to invest $25 million in the Clear Vision Impact Fund to bolster small- and medium-sized minority-owned businesses that support historically under-served communities.

Recommerce has been an integral part of eBay’s purpose since the Company was founded in 1995. As a pioneer of the circular economy, eBay has created a space where people can buy and sell pre-owned goods. This helps preserve the world’s natural resources and reduces the Company’s carbon footprint by saving on the water and energy typically used in producing new goods and saves them from being sent to landfills.

eBay continued its work to reach its goal of 100% renewable energy by 2025 and signed its second virtual power purchase agreement in 2021. In our continued efforts to address climate change, we announced an updated carbon reduction goal that has been approved by the Science Based Target initiative: eBay commits to reduce its own (scope 1 and scope 2) emissions 90% by 2030 from a 2019 base year and to reduce value chain (scope 3) emissions from downstream transportation and distribution by 20% in the same timeframe. We will also be carbon neutral for our scope 1 and 2 emissions by the end of 2021 and each year moving forward. eBay was ranked in the U.S. Environmental Protection Agency’s Green Power Partnership National Top 100 and Top 30 Tech & Telecom for the second year. Additionally, we strive to integrate best practices in our offices and data center operations and to continually reduce our environmental footprint. This year, eBay was also recognized for its commitment to sustainability and responsible business by its inclusion in the Dow Jones Sustainability Indices World and North American Indices for the third straight year. eBay also scored an A- on the CDP Climate Change questionnaire.

Financial Information

We measure our footprint in our addressable market according to GMV. GMV consists of the total value of all paid transactions between users on our platforms during the applicable period inclusive of shipping fees and taxes. In 2021, we generated $87 billion in GMV, of which approximately 54 percent was generated outside the U.S. We believe that GMV provides a useful measure of the overall volume of paid transactions that flow through our platforms in a given period.

At the end of 2021, eBay had 147 million active buyers and 17 million sellers. In 2021, we had approximately 1.5 billion live listings globally. The term “active buyer” means, as of any date, all buyer accounts that paid for a transaction on our platforms within the previous 12-month period. Buyers may register more than once and, as a result, may have more than one account. “Sellers” include consumer-to-consumer (“C2C”) and business-to-consumer (“B2C”) sellers that have received payment for a transaction on our platforms within the previous 12-month period.

We generate revenue primarily from the transactions we successfully enable, including monetization of managed payments and first-party advertising and through marketing services. The majority of our revenue comes from a take rate on the GMV of transactions paid on our platforms. We define “take rate” as net transaction revenues divided by GMV.

Our platforms are designed to enable our buyers and sellers to leverage our economies of scale and capital investments, such as in sales and marketing, mobile, customer acquisition, technology innovation and customer service.

Notable Business Transactions in 2021 and 2020

We regularly review and manage our investments to ensure they support eBay’s strategic direction and complement our disciplined approach to value creation, profitability and capital allocation. eBay completed the sale of its Classifieds business to Adevinta for $2.5 billion in cash, subject to certain adjustments, and 540 million Adevinta shares in the second quarter of 2021, then completed the sale of approximately 135 million shares of our Adevinta stake to Permira for approximately $2.3 billion in cash in the fourth quarter of 2021. Additionally, we completed the sale of 80.01% of our ownership stake in eBay Korea LLC to E-mart for approximately $3.0 billion of gross cash proceeds, subject to certain adjustments in the fourth quarter of 2021.

In the first quarter of 2020, we completed the sale of StubHub to viagogo for $4.05 billion in cash, subject to certain adjustments.

Competition

We encounter vigorous competition in our business from numerous sources. Our users can list, sell, buy, and pay for similar items through a variety of competing online, mobile and offline channels. These include, but are not limited to, retailers, distributors, liquidators, import and export companies, auctioneers, catalog and mail-order companies, directories, search engines, commerce participants (consumer-to-consumer, business-to-consumer and business-to-business), shopping channels and networks. As our product offerings continue to broaden into new categories of items and new commerce formats, we expect to face additional competition from other online, mobile and offline channels for those new offerings. We compete on the basis of price, product selection and services, and global scale.

For more information regarding competitive factors impacting our business, see the information in “Item 1A: Risk Factors” under the captions “Substantial and increasingly intense competition worldwide in ecommerce may harm our business” and “We are subject to regulatory activity and antitrust litigation under competition laws that could adversely impact our business.”

Government Regulation

Government regulation impacts key aspects of our business. In particular, we are subject to laws and regulations that affect the ecommerce industry in many countries where we operate.

With two additional states adopting Internet sales tax laws in 2021, some buyers across the U.S. encountered sales tax for the first time on eBay. To date, 45 states, the District of Columbia and Puerto Rico have enacted Internet sales tax legislation. Additionally, a digital service tax (DST) was implemented in Spain in 2021, and we are complying with the legislation. Our business will also be required to increase payments reporting requirements for U.S. sellers as a result of federal legislation. Starting on January 1, 2022, all businesses that process payments are required to issue a Form 1099-K for all sellers who receive $600 or more in sales, a decrease from the previous reporting threshold of $20,000 and 200 transactions. Form 1099-Ks for the new thresholds will be issued in January 2023. Tax collection responsibility and the additional costs associated with complex sales and use tax collection, remittance and audit requirements, or reporting, could create additional burdens for buyers and sellers on our websites and mobile platforms.

Legislation requiring increased seller information collection, verification and disclosure for online marketplaces was considered in a number of states and passed into law in Arkansas in 2021. Federal legislation is also being considered by Congress. Increased seller mandates could create additional burdens for sellers on our websites and mobile platforms.

For more information regarding regulatory risks, see the information in “Item 1A: Risk Factors” under the caption “Our business is subject to extensive government regulation and oversight, which could adversely impact our business” and “Our business and our sellers and buyers may be subject to sales and other tax regimes in various jurisdictions, which may harm our business.”

Seasonality

We expect transaction activity patterns on our platforms to mirror general consumer buying patterns. Please see the additional information in “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Seasonality.”

Technology

The eBay Marketplace uses a combination of proprietary technologies and services as well as technologies and services provided by others. We have developed intuitive user interfaces, buyer, seller and developer tools and transaction processing, database and network applications that help enable our users to reliably and securely complete transactions on our sites. Our technology infrastructure simplifies the storage and processing of large amounts of data, eases the deployment and operation of large-scale global products and services and automates much of the administration of large-scale clusters of computers. Our infrastructure has been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences.

In support of our commitment to innovation and a better customer experience, we have been on a multi-year evolution to modernize our marketplace. Through technologies like artificial intelligence, we are anticipating the needs of buyers, sellers and developers, empowering entrepreneurs looking to grow their business, and making the platform more accessible to everyone. We aim to create highly personalized and inspiring shopping experiences powered by advanced technologies.

For information regarding technology-related risks, see the information in “Item 1A: Risk Factors” under the captions “Our business is subject to online security risks, including security breaches and cyberattacks,” “Systems failures and resulting interruptions in the availability of or degradation in the performance of our websites, applications, products or services could harm our business” and “Regulation in the areas of privacy and protection of user data could harm our business.”

Intellectual Property

We regard the protection of our intellectual property, including our trademarks (particularly those covering the eBay name), patents, copyrights, domain names, trade dress and trade secrets as critical to our success. We aggressively protect our intellectual property rights by relying on federal, state and common law rights in the U.S. and internationally, as well as a variety of administrative procedures. We also rely on contractual restrictions to protect our proprietary rights in products and services. We routinely enter into confidentiality and invention assignment agreements with our employees and contractors and nondisclosure agreements with parties with whom we conduct business to limit access to and disclosure of our proprietary information.

We pursue the registration of our domain names, trademarks and service marks in the U.S. and internationally. Additionally, we have filed U.S. and international patent applications covering certain aspects of our proprietary technology. Effective trademark, copyright, patent, domain name, trade dress and trade secret protection is typically expensive to maintain and may require litigation. We must protect our intellectual property rights and other proprietary rights in an increasing number of jurisdictions, a process that is expensive and time consuming and may not be successful.

We have registered our core brands as trademarks and domain names in the U.S. and a large number of other jurisdictions and have in place an active program to continue to secure trademarks and domain names that correspond to our brands in markets of interest. If we are unable to register or protect our trademarks or domain names, we could be adversely affected in any jurisdiction in which our trademarks or domain names are not registered or protected. We have licensed in the past, and expect to license in the future, certain of our proprietary rights, such as trademarks or copyrighted material, to others.

From time to time, third parties have claimed — and others will likely claim in the future — that we have infringed their intellectual property rights. We are typically involved in a number of such legal proceedings at any time. Please see the information in “Item 3: Legal Proceedings” and in “Item 1A: Risk Factors” under the captions “The listing or sale by our users of certain items, including items that allegedly infringe the intellectual property rights of rights owners, such as pirated or counterfeit items, illegal items or items used in an illegal manner may harm our business,” and “We may be unable to adequately protect or enforce our intellectual property rights and face ongoing allegations by third parties that we are infringing their intellectual property rights.”

Human Capital Management

As of December 31, 2021, we employed approximately 10,800 people globally. Approximately 6,300 of our employees were located in the U.S. eBay has robust people-focused programs to support and retain our employees globally and to attract our future employees. Our recruitment, development, compensation and benefits and wellness programs are designed to reflect our values and our goal to make eBay competitive in the market for talent and a place that is welcoming and inclusive. eBay’s management is focused on delivering programs that develop and support our people and connect them with our customers, our community, and each other.

Culture

The heart of our culture is Our DNA, a framework launched in 2020 to link all employees to our purpose and beliefs.

Our Purpose: We connect people and build communities to create economic opportunity for all

Our Beliefs: These beliefs reflect our culture at its best and our shared desire to be part of a company with a productive, fun way of working where we deliver the best we can for ourselves as employees and for our customers.

• Empower our community

• Innovate boldly

• Deliver with impact

• Be for everyone

• Act with integrity

In 2021, we continued to integrate Our DNA throughout our people programs and processes, including performance management, recruiting and hiring, new employee onboarding and training for individuals and managers. The company’s Employee Code of Conduct has been rewritten to align to our DNA beliefs language.

Pandemic Response

We continue to monitor and adapt to workplace changes brought on by the COVID-19 pandemic. eBay continues to support our people who are predominantly working remotely by providing equipment, systems and resources for remote connection, including for our customer experience team members who are continuing to work from home in most cases. We also increased work flexibility to balance personal and professional responsibilities and continued to provide back-up in-home child and adult care in the U.S., U.K., Canada, Germany and Ireland. eBay has continually engaged with our people to support physical and mental health for them and their families through online wellness resources, webinars, telehealth access and expansion of company-paid mental health support as well as additional training for managers and peers to support mental health. As we continued to hire employees throughout the pandemic, we have reimagined the employee onboarding experience. We have also had the opportunity to welcome employees back to the office on a voluntary basis, where it is safe to do so, and introduced new hybrid habits to enable collaboration in a hybrid environment.

Diversity, Equity and Inclusion

Diversity, Equity and Inclusion continues to focus on three strategic areas — workforce, workplace and marketplace. Equity remains at the forefront of all we do to hire, grow, and keep top talent, enhance corporate performance, and foster a welcoming and inclusive place to work, learn and grow. We continue efforts to enhance our processes, while leveraging deepened and actionable data insights, coupled with updated learning and development practices as well as the planned design and implementation of a new governance model to ensure that we drive shared accountability throughout the organization. Our Communities of Inclusion welcome and connect eBay employees all over the world to help us build and nurture employees, allies and external communities. They host events and forums to connect employees to groups organized around age, disability status, ethnicity, gender, religion, military status, parental status and sexual orientation and gender identity and expression. We are currently preparing our sixth Global Diversity, Equity & Inclusion report for publication in the second quarter of 2022.

Acting with Integrity

We maintained our commitment to ethics and acting with integrity in 2021. We took big and small actions to ensure that we are open, honest, ethical and authentic with ongoing trainings, quarterly “tone from the top” engagements between leaders with their employees and daily ethics contests during Ethics and Compliance Week.

Parental Leave

In addition to competitive pay and benefits, eBay offers additional parental time off beyond what is required by law in the U.S. and in most countries where we operate. This benefit is offered for parents welcoming a new child into the family whether by giving birth, adopting or welcoming a child through surrogacy. This is an important demonstration of our commitment to working parents and their families.

Employee Voice & Values

In addition to multiple channels for sharing feedback, we also regularly survey our employees on trust and engagement, their experience with diversity, equity and inclusion, ethics and integrity, and this year regarding their thoughts on returning to the office. Our employees highly value eBay’s approach to Impact and Responsibility and Diversity, Equity & Inclusion discussed earlier in the report. Employees are proud of eBay’s efforts to reduce our carbon footprint and the sustainable commerce that is enabled by our platform. These commitments are core to our business and they positively impact recruitment, engagement and retention.

Available Information

Our Internet address is www.ebay.com. Our investor relations website is located at investors.ebayinc.com. We make available free of charge on our investor relations website under the heading “Financial Information - SEC Filings” our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after such materials are electronically filed with (or furnished to) the SEC at www.sec.gov.

We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website. Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs on our investor relations website. Company sustainability information for investors is available on our investor relations website under the heading “ESG Investors.” Corporate governance information, including our governance guidelines for our Board of Directors (“Board”), Board committee charters and code of conduct, is also available on our investor relations website under the heading “Corporate Governance.”

The contents of our websites and webcasts and information that can be accessed through our websites and webcasts are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with (or furnish to) the SEC, and any references to our websites and webcasts are intended to be inactive textual references only.