Does eBay (NASDAQ: EBAY) still have the image of a popular and friendly place to sell and buy everything from cars to beanie babies to cell phones to wrapping paper? The sheer amount of stuff on eBay for sale (from junky coffee cups to Hummers) still makes the company's website exceedingly attractive to millions of Americans, as well as millions of other consumers and sellers across the globe. But not all has been rosy for the world's largest online auction house in recent years. Rising fees, growing customer dissatisfaction, and an exodus of certain sellers all have been highly publicized and have given eBay a few large black eyes. The auction website keeps on churning though, and listings seem to be as plentiful as ever. Yahoo! (NASDAQ: YHOO) even announced that is would discontinue its Yahoo! Auctions website soon. My guess? All auction customers were using eBay instead.

For a "newbie," trouncing around eBay looking for things can be a somewhat daunting experience. Does this make it likely that a transaction may not take place? After all, there are hundreds of Nintendo Wii accessories on eBay right this second -- what makes one better than the other? Are customers shopping on price alone, or opting to not shop at all? The auction juggernaut is reaching middle age, and it seems the stagnant strategy that was once darling to its customers and visitors is getting an overhaul. It's time for that midlife-crisis Corvette to spruce up its image, yes? What can eBay do in the next twelve months to grow beyond its past as an "online auction?" Meg Whitman, eBay's CEO, has a cryptic answer for that one.

A recent point Meg tried to make is that the company she leads needs to provide an easier experience when buying products from its auctions and make inroads (and off-ramps) to the online marketplace seem more like a physical shopping experience. Remember, eBay does not make money from browsers and lookers, but from transactions and listings. Anything that ups the number of transactions (which drives more listings) is a good thing for eBay and its investors. With that, eBay CEO Meg Whitman recently said "'Our user experience has always been fantastic, but it didn't keep up, in my view, as well as it should have ... you will see more changes to eBay's buyer experience in the next 12 months than you probably have seen in the past three or four years.'' Let's hope so.

As Yahoo! Inc. (NASDAQ: YHOO) continues to focus on attacking Google Inc.'s (NASDAQ: GOOG) established and lucrative advertising business model, the company is slimming down in some areas to focus on others. As such, Yahoo! Auctions will close in June after about nine years (read: a lifetime) in existence. I remember in 2001 when Yahoo! Auctions was poised to compete seriously with eBay Inc. (NASDAQ: EBAY). Since then, it had done nothing like that and has withered while eBay has dominated online auctions.

In other words, this is no loss to Yahoo!, but it does signal that the company may soon be ridding itself of other divisions and products that aren't aligned with the company's strategy to 1) make money on customer subscriptions to premium products, and 2) to make money on advertising and try to gain headway in the revenue pool that Google dominates right now.

By contrast, Yahoo! Auctions garnered about 0.2% of U.S. online auction visits this year while eBay has seen about 85% of that action. If you can't compete in the space, you might as well leave -- or so the analyst thinking goes. I agree. Yahoo! Auctions is not contributing at all to the success of Yahoo!, so selling it shutting it down seems the best option. The remaining question left is this: what other properties will Yahoo! be looking to scuttle soon?

I've been getting buzz about major activity dealing with Yahoo!'s (NASDAQ: YHOO) auctions. As of this writing, it's difficult to sort out. I have encountered a site announcement stating that Yahoo! Auctions is closing shop and I have encountered stories that claim Yahoo! Auctions is being purchased by Jack Ma of TaoBao fame. One thing is for sure, something is happening and I'm relatively sure that it's not just a ploy to throw some distraction into the on-again/off-again Microsoft to Yahoo! negotiations. It's clear that Microsoft (NASDAQ: MSFT) seeks to join forces with Yahoo! in some manner, and it appears that Yahoo! Auctions are slated for retirement, but at this point all of the other noise is just that -- noise.

For the WSJ's take on the MSFT/YHOO story, and a bushel of public comments, click here.

I'm speculating that the increasing pressure by the IRS toward requiring increased revelation of auction sales statistics may be playing a part in the Yahoo! Auctions closure. It's a given that the taxing authorities aren't going to leave the internet alone. I feel that it will be only a short while before the IRS selects a few "big time" online auction sellers to make examples of in a token tax crack down.

Additionally, we must consider that in November 2007, many internet sales regulations are back up for review. It's time to hold your breath, all you small-time internet retailers. The sheriff's comin' to town.