This morning it was reported that eBay and Google formed an advertising alliance. This strategy reminds me of the quote attributed to Sun-tzu in the Art of War: "Keep you friends close, and your enemies even closer."

In his take this morning, Peter Cohan writes that he thinks the Google eBay deal is much ado about nothing. But I beg to differ, on several different levels.

First, I think it's a good strategic move for both companies. This deal creates opportunities for both companies as "Web2.0" becomes even more tangled. While both companies did not promote any near-term financial benefit, the merging of interests does give further indication of how eBay intends to deploy its new Skype (costly) "asset" with it's concept of "click-to-call."

This will allow buyers and sellers to communicate immediately, perhaps allowing for better self-policing and processing of sale items.

Second, and more importantly, this deal shows that both firms see advantages in working together when mutual benefits can be derived -- even though they are competitors in many ways.

Since eBay has also formed an alliance with Yahoo domestically, it also shows that the company feels that it is important to promote competition in more ways than just in its own marketplace. Perhaps this deal will allow eBay to keep a closer eye on its new nemesis.

Third, and perhaps most important, while this deal does nothing to put cash on the bottom line, it does make it harder for a newcomer to gain traction. That benefit should not be ignored. You never know when another MySpace will pop-up out of nowhere to claim a slice of the Internet pie.

Finally, I think the move shows how management at both companies is focused right now on creating more shareholder value. Last Friday in my post, GOOG at $600 (good luck!) + eBay at, what?, I called into question the valuations of both companies. The management teams seem to be feeling the heat to shore up their generous stock prices.

GOOG & eBay have formed numerous alliances with major and minor web players and continue to do so. This is smart. At this stage of the Web's development, everyone wants to be everywhere since no one has any idea about the end game.

Disclosure: I have never held any position in Google long or short. I owned shares in eBay until January 2006 and have no current position.

Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an Architecture & Planning firm.

GOOG/eBay MATTERS. It's all about Sun-tzu! originally appeared on BloggingStocks on Mon, 28 Aug 2006 11:47:00 EST. Please see our terms for use of feeds.