eBay Inc. (NASDAQ: EBAY) has finally admitted that Google Inc. (NASDAQ: GOOG) isn't its friend. This is long overdue.
For months, CEO Meg Whitman and other top eBay executives have used some convoluted logic to argue that Google Checkout doesn't compete with its PayPal service. Google executives also argued not-too-convincingly that there was enough room for both Google Checkout and PayPal in the marketplace.
While it's true that PayPal and Google Checkout aren't exactly alike, they do compete. Everyone knew it but the companies tried to maintain this false image that the Internet is one big politically correct summer camp where everybody is a partner and there are no winners and losers.
That analogy bit the dust Wednesday when Google scheduled an event in Boston to promote Checkout to coincide with a big eBay sellers' event. In response, eBay yanked its search advertising from Google. Remember that eBay has been one of the biggest buyers of search advertising on Google for years.
Wall Street had always assumed that eBay needed Google more than Google needed eBay. I'm sure that analysts will be closely monitoring eBay's comScore data to see if there is any big decline. This isn't the end of the world for eBay.
The auction giant now will make an even more attractive merger partner for either Yahoo Inc. (NASDAQ: YHOO) or Microsoft Corp. (NASDAQ: MSFT) both of whom are desperately trying to catch Google in search. Maybe Barry Diller's IAC/InterActiveCorp. (NASDAQ: IACI) will want to partner with eBay.
Though eBay's growth is slowing, maybe it's not slowing as much as Wall Street analysts suspect. Tim Boyd of American Technology Research told MarketWatch that eBay wouldn't have pulled this move unless its quarterly earnings were on track for a "solid quarter."
Boyd is right. Whitman isn't stupid. This move was a long time coming.
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Reader Comments (Page 1 of 1)
6-15-2007 @ 8:45AM
Brian said...
Kudos to Meg, this lady play cards with 5 Aces
in her hands.
Growth is slowing where, not when there is over 500 million listings today vs 300 million 2 years ago.
Where are all the analysts now, with the PayPal killer B.S.
Brian
6-15-2007 @ 11:21AM
firemeg said...
"eBay wouldn't have pulled this move unless its quarterly earnings were on track for a "solid quarter."
Or maybe eBay wanted to save millions in expenses over the next couple of weeks to help the Q2 profit numbers?
After the news of the abandonment of Adwords in the US, eBay traffic percentage is down almost to the six year low. I'm guessing it will blow past that low set in May.
btw - why is it that eBay needs to stand up to Google? Because Google started a competing service? Heck, eBay hasn't had an original thought since Omidyar's idea for eBay 10+ years ago.
6-15-2007 @ 1:16PM
Gary E. Sattler said...
"Though eBay's growth is slowing, maybe it's not slowing as much as Wall Street analysts suspect."
-Or just maybe it's slowing more than eBay will let you see.
"Wall Street had always assumed that eBay needed Google more than Google needed eBay."
-Google laughs at eBay and you know it.
"In response, eBay yanked its search advertising from Google."
-You had made it sound as if eBay was the antagonist in this situation when in fact all eBay is doing is reacting to the bigger player.
"Whitman isn't stupid. This move was a long time coming."
-No, Whitman isn't stupid. She's slick, as slick as they come. She has all of Wall Street bamboozeled. You're right when you indicate this move was a long time in coming but take notice;
This ain't eBay's move.
6-23-2007 @ 9:56PM
CS said...
This deal is more interesting from an insider's perspective: http://blog.peaknineventures.com/2007/06/insiders-case-for-ebay-yahoo-merger.html