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By Tony Hallett, 16 June 1999 00:30

NEWS eBay, the Internet auction company, is reconsidering its future in the UK following last week's developments in the Godfrey vs Demon Internet defamation lawsuit. The rethink has been revealed by Labour MP Derek Wyatt, following talks with senior US government officials. Last week, Demon chose not to appeal a pre-trial ruling - a move which experts have said makes it more likely that the plaintiff, physics lecturer, Dr Laurence Godfrey, will win the case. Internet and cyberliberties groups such as the Internet Service Provider Association (Ispa), the London Internet Exchange (Linx) and Internet Freedom were quick to warn that the development of the Internet and ecommerce in the UK could be hindered as a result of the case (http://www.silicon.com/a30892 ). Others doubted it will have a major impact. eBay has been dogged by service downtime and a tumbling share price since last Friday. However, it still has a market capitalisation of $17.5bn, and a retreat from the UK could be seen as a setback for a UK government determined to promote ecommerce. eBay's newly appointed VP Europe, Michael van Swaaij, admitted the company is monitoring the situation very closely, but denied it will make a point of boycotting the UK market. eBay is only just establishing a full commercial presence in the country. Van Swaaij said: "For a lot of businesses, this [pre-trial ruling] is kind of scary, because the feeling among Net companies is that ISPs will be forced to become judge and jury. But feedback from buyers and sellers is a very important part of building the eBay community. We are responsive, although it does look like a lack of action from Demon prompted the court case." Online auction companies such as eBay, Humpty Dumpty and QXL could be more likely to be affected by a Godfrey vs Demon precedent, because unlike other Web-based retailers such as Amazon.com, they predominantly rely on users exchanging information. Often, that information simply refers to price and product description, but it can include potentially defamatory remarks, for example in user feedback comments.