Has Google pinched PayPal's mobile wallet?

There have been some funny goings-on around Google's new mobile wallet offering - so much so that PayPal has accused it of poaching its technology.

by Emma Haslett
Last Updated: 06 Jul 2011
More infighting in Silicon Valley, this time between Google and online payment company PayPal. PayPal is suing the search giant, accusing it of stealing technology, after Google unveiled a new ‘mobile wallet’ payment system yesterday. Apparently, it’s all to do with Google’s vice-president of payments, Osama Bedier (who also happens to be a former PayPal executive), whose timing did, admittedly, leave a lot to be desired…

For those who aren’t aware of it, mobile wallet systems use technology called Near Field Communications to allow consumers to wirelessly pay for goods straight from their mobile phone, instead of faffing around with credit cards. It’s already big in Japan and it’s been predicted for some time that the technology will create a storm over here, although Google has been the first company to launch the technology. Google’s version, for its Android smartphones (imaginatively named Google Wallet), will launch in the US over the summer and over here after that.

The dispute, though, is about where Google got the technology from. According to PayPal, it had already come up with its own version and was deep into negotiations with Google (led, on PayPal’s side, by Bedier) to integrate its system with Android, when the talks were mysteriously brought to a halt. Then, out of the blue, Bedier announced his resignation, moving over to Google in January where, according to PayPal’s allegations, he ‘misappropriated PayPal trade secrets by disclosing them within Google’ and, to add insult to injury, tried to poach some of his former colleagues.

It’s going to be a difficult one for PayPal to prove. NFC isn’t exactly new technology – as we said, it’s been big in Japan for a while now. And non-compete clauses are notoriously difficult to uphold, particularly when an employee is simply using his or her expertise. You can’t, after all, stop an employee from changing jobs.

While PayPal is briefing its lawyers, Microsoft, or more specifically, its CEO, Steve Ballmer, has been given a verbal dressing-down by one of its shareholders. David Einhorn, the head of hedge fund Greenlight which owns $230m (£140m) worth of Microsoft shares, has criticised Ballmer for being ‘stuck in the past’ and allowing ‘competitors to beat Microsoft in huge areas, including search, mobile communications software, tablet computing and social networking’.

With just 0.1% of the company, Einhorn might not be its largest shareholder, but that’s still going to smart. Admittedly, share prices have been down lately – but with a relatively good reception for Windows 7 and software sales climbing, things are beginning to look up for Microsoft. So perhaps Einhorn spoke too soon…

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