Ebay Inc Segments

We have identified three reporting segments: U.S., International and Payments. The U.S. segment includes U.S. online marketplace trading platforms other than those of our PayPal and Billpoint subsidiaries. The International segment includes our international online marketplace trading platforms other than those of our PayPal and Billpoint subsidiaries.

eBay and our consolidated subsidiaries had websites directed toward the following countries:

• Australia
• Austria
• Belgium
• Canada
• China
• France
• Germany

• Hong Kong
• Ireland
• Italy
• New Zealand
• Singapore
• South Korea
• Spain

• Sweden
• Switzerland
• Taiwan
• The Netherlands
• United Kingdom
• United States

Major Categories

• Antiques
• Art
• Books
• Business & Industrial
• Clothing, Shoes and Accessories
• Coins
• Collectibles
• Computers & Electronics
• Dolls & Bears

• Entertainment
• Everything Else
• Home
• Jewelry & Watches
• Musical Instruments
• Pottery & Glass
• Real Estate
• Specialty Services
• Sports

• Stamps
• Tickets
• Toys & Hobbies
• Travel
• eBay Motors
• Motorcycles
• Other Vehicles
• Passenger Vehicles
• Parts & Accessories

Each major category has numerous subcategories, with the most popular items sold on eBay being those that are relatively standardized, well represented with a photo, small and easily shipped and relatively inexpensive.

Payment Services

Providing more efficient and effective payment methods is essential to creating a faster, easier and safer online trading experience. Traditional payment methods such as checks, money orders and credit cards processed through merchant accounts, all present various obstacles to the online trading experience, including lengthy processing time, inconvenience and high costs. Our PayPal online payments solution allows our community of eBay users, as well as users of other online businesses, to pay for their transactions securely, easily and quickly.

Communications

We added the Communications business upon our acquisition of Skype in October 2005. Skype is a Luxembourg-based company that was established in 2003. Skype provides software that, among other things, enables free VoIP calls between Skype users online. Skype’s premium offerings, which are currently Skype’s

Skype offers high-quality voice communications to anyone with an Internet connection anywhere in the world. The Skype software is easy to download and install, and enables free VoIP calls between Skype users online. Skype’s software also offers a robust set of features, including voicemail, instant messaging, call forwarding, conference calling and Skype video.

At the core of our Communications business is the ability to communicate with buyers and sellers over the Internet. Communication via e-mail, the traditional way for buyers and sellers to communicate, can cause friction in the online shopping experience, caused primarily by delays in response time. We believe that Skype will enable eBay to create new potential channels to monetize e-commerce activity and that it can reduce friction in the online shopping experience. Communication via Skype allows buyers and sellers in highly involved, expensive or complex categories of goods or services, to benefit from being able to communicate directly with each other in an instantaneous and private environment. For Skype’s fee-based offerings, users can utilize PayPal, which allows for efficient online payments and increased growth in users for PayPal as well.

Skype provides downloadable peer-to-peer Internet software. To use Skype offerings, users need only a broadband Internet-connected computer with microphone and speakers, a headset, or a USB phone. Once the software is downloaded, users register with Skype, contact their peers and begin the online communication process. Skype is cross-compatible for a wide range of different computer platforms and devices including Windows, Mac OS X, Linux and Pocket PC. Skype provides its software by using its users’ existing broadband Internet connections. In addition, Skype works behind the majority of firewalls and gateways with no special user configuration. Skype encrypts all calls and instant messages, end-to-end, for privacy. Encryption is necessary since all calls are routed through the public Internet. Skype licenses from third parties certain key technology underlying particular components of its offerings, including the technology underlying its peer-to-peer architecture and firewall traversal technology, and the audio compression/decompression used to provide high sound quality.