Bajaj, an American citizen, was arrested Friday in the Indian capital under India's Information Technology Act, after a video clip of two Delhi youngsters engaging in a sex act was sold via Baazee.com. The boy who engaged in the act filmed it on his camera phone and later sent the clip to his friends. He has been arrested. The clip was put up for auction by a student of the Indian Institute of Technology at Kharagpur. That student was also arrested.
Following the incident, schools have banned mobile phones on their premises.
"We applaud the Indian justice system for making this decision quickly," eBay said in a statement. "Bajaj will continue to cooperate with the police investigation into this matter. He will also present his response to the charges against him in court at a later date."
eBay acquired Baazee in a deal worth $50 million earlier this year. Baazee claims more than 1 million registered customers.
According to market research company IDC, about 17 million people in India use the Internet. This number is projected to rise to 30 million by 2006.
The company said a Baazee.com user had attempted to sell the pornographic video clip on the Web site in late November. The video clip was not shown on the site but the seller had offered to e-mail the clip to buyers directly, it said. The listing was taken off the portal once it was discovered because it violated Baazee's policies and user agreement, eBay said.
Local industry leaders have condemned the arrest and fear a negative impact on the growth of India's tech industry.
"As a global, mature, and responsible technology industry and the most attractive destination for services, we need to ensure that we do not send out the wrong signals to global customers and investors," officials from the National Association of Software and Service Companies (Nasscom) said, calling the arrest an "extreme and completely unnecessary step."
According to the Federation of Indian Chambers of Commerce and Industry, the action could hurt the growth of e-commerce and send wrong signals to potential investors. The episode, the industry body said, also points to the need to bring the Information Technology Act in line with global norms.
The incident has also drawn attention from the United States. On Monday, U.S. Department of State spokesman Richard Boucher told reporters that "this situation is one of concern at the highest levels of the U.S. government."
"Secretary (Colin Powell) has been following it closely. He was actually asking about it at this morning's staff meeting. It's a matter that we have been following," Boucher said, according to a transcript of the press conference posted on the department's Web site. "He has been visited by a U.S. consular officer from the U.S. embassy in New Delhi."
Boucher would not confirm whether incoming Secretary of State Condoleezza Rice had contacted Indian officials about the matter.
