Aside from bad customer service, I think eBay should also be worried about coming under scrutiny from competition authorities. I don’t think eBay has been doing anything illegal, but it does seem that it’s hard for other online auction sites to get established. Of course eBay still faces competition from other non-auction marketplaces, and this might be sufficient to constrain eBay’s market power, I don’t know. Anyway, one of the things that probably makes it hard to compete with eBay is that eBay ‘owns’ the reputations of its users. If you want to switch to an alternative site, you have to start from scratch with a blank reputation. As various studies have shown, having a good reputation is beneficial to some extent, at least for sellers. However, eBay has resisted attempts to let people either export their reputations to alternative auction sites, or use third-party reputation systems to manage their reputation on eBay (see here, for example).

So I can quite easily see some competition authority making the argument that eBay’s control of these reputations restricts competition among online auction sites. I don’t know whether this argument would hold water when subject to close analysis, but there’s clearly a risk to eBay that it could come under pressure to allow ‘reputation portability’, much as telecommunications firms are subject to ‘number portability’ to promote competition.