Ebay's motivations and dysfunctional actions are like those of Congress- they seldom make sense. (In fact, it almost seems like both organizations are being run by the same idiots).

Ebay was a recession-proof business with no competition. When CEO Donahoe came on-board, he openly declared that he wanted to get rid of Ebay's "flea market image" and go head to head with Amazon. Why anyone would want to take on a formidable business such as Amazon, which they were NOT in direct competition with, is beyond me- but that is what they wanted- so they proceeded to wage war on the very people who had built Ebay (The small amateur sellers).

Their love affair with mega-sellers isn't working out too good. Their partnership with General Motors [in an effort to make Ebay Motors a virtual nationwide dealer showroom] didn't last long. Many large retailers have also jumped ship- Neiman Marcus being the most recent. And of course, all these big retailers and e-sellers, like Buy.com have their own websites, and their only interest in using Ebay and paying extra fees [although not as high as you and I would pay- as they get a discount] is just to lure more people to their own sites after an initial sale on Ebay.

So you're right- it doesn't make sense; Give the big sellers a substantial discount; lose PayEnemy revenue, because all the big retailers/etailers can process credit card payments directly; lose customers who are lured to the seller's website after the initial transaction; etc. etc. But that's Ebay- NOTHING they've done in the last 5 years makes any sense to a reasonable and intelligent observer.

Donahoe is an advocate of/practitioner of "disruptive innovation"[Google it if not familiar]. His actions sure have been disruptive; and not the kind of innovations that anyone would want to brag about....but rather, the kind which require "creative accounting" to justify.

A smaller business having taken Ebay's course of actions, would have failed by now; Ebay, being huge and having benefited from being there first, is like many other large giants which have gone down recently- seeming too big to fail....but in fact, their death is just ever so slow and protracted- like James Cagney being shot and staggering two blocks.