Heh, this is the first time I've heard this. Before I was only familiar with the up-from-bootstraps "we just became so popular through a pay button everyone loved" success story.
But some many online payment companies had already tried and failed at "traditional" growth. PayPal crossed the chasm by essentially bad faith gamesmanship. Nothing illegal, mind you; but I would consider it highly unethical. Not to mention difficult to stop if you're EBay.
Why would it have been difficult to stop for eBay, couldn't they have simply removed the PayPal button from their site if they didn't like it?
as I read the above PayPal wasnt a button on eBay yet. Just based on the above comments it sounds like initially PayPal staff were doing a bunch of buying and selling on eBay and insisting they they be paid via this thing called 'PayPal'.