MarketWatch writer Dan Gallagher offered a brief synopsis of comments by Bear Stearns analyst Robert Peck in reaction to Peck's January 17 upgrade of eBay Inc. (NASDAQ: EBAY). In my opinion, Gallagher was too kind with his writing. Peck's comments are a weak attempt to cloud perceptions, nothing more. Let's take a look at some of those words, shall we?

In using a pendulum metaphor, Peck refers to eBay investors as being either greedy or fearful. I believe that to mean he thinks investors who sold in the $40 range were greedy and investors who are now resisting the $30 mark live in fear. I give more credit to the investors in their reaction to issues we've discussed. Mr.Peck seems to think they've overreacted on both ends.

Robert Peck offered the statement that, "eBay's issues have been overly accounted for" as if eBay's issues comprise a tangible, one time composite. I'll tell you as fact that eBay's negative issues are active and on going. You've read the news and I think you sense that there's much pressure coming in. Amazon clipped eBay's holiday season page views. Ticket selling competitors are on the prowl. Skype still flounders without declared intent and Meg Whitman is now toying with exit plans.

Peck concedes that eBay could be affected by changes in consumer spending due to recession but he would like us to believe that increased bargain hunting will offset possible negative affects. What he doesn't mention is that a bargain binge could deeply affect the bottom line of PayPal, eBay's lion-hearted revenue generator. We must also not forget that a checkout service has taken hold via Google (NASDAQ: GOOG) and now we're hearing whispers of increased payment services from Amazon.com (NASDAQ: AMZN).

As several sources wrote last week, Amazon.com (NASDAQ: AMZN) will start its own online payment system that will put it into competition with eBay's (NASDAQ: EBAY) PayPal and Google's (NASDAQ: GOOG) CheckOut service. Although CheckOut is not a large business for Google, PayPal is a very large revenue source for eBay.

The new product will be called Amazon Flexible Payments Service, according to MarketWatch.

The investors in eBay have reason to watch the development closely. PayPal revenue rose 34% last quarter to $454 million. The unit had almost 36 million active accounts at the end of the June 30 period.

While Google's major business is not as likely to funnel customers to become users of an online payment system, Amazon's retail customers might well use its systems if it become part of the standard e-commerce operations at the company's websites.

That could give eBay fits.

Douglas A. McIntyre is a partner at 247wallst.com.

eBay (NASDAQ: EBAY) has decided to move its advertising back to Google (NASDAQ: GOOG). But the auction site said it does not really need the search engine.

During the 10-day period that eBay pulled its ads, the company claims that its audience and auction results did just fine. According to eBay management, it got help from Microsoft (NASDAQ: MSFT)'s MSN, AOL, and Yahoo! (NASDAQ: YHOO) to keep leads coming to its websites.

eBay pulled its ads from Google when the search engine tried to throw a party for its CheckOut business during a gathering of clients that use eBay's PayPal. eBay saw the move as a way for Google to take customers in broad daylight.

The whole incident creates a mystery that may remain in place for some time. If eBay does not need Google, why go back? The firm says that its ad commitment going forward will be more modest than in the past, but if MSN, AOL, and Yahoo! deliver such good results and do not compete in the online payment business, why not stay away from Google for good?

There could be two answers. The first is that eBay is being disingenuous about the effectiveness of Google's AdWord program and can't do without it. The other is that eBay may be getting ready to announce a large deal with the three other portals, perhaps one that would involve them using PayPal. In essence, they would be creating an alliance to compete with the largest search engine.

Maybe.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Last week, eBay Inc. (NASDAQ: EBAY) pulled out its AdWords from Google Inc. (NASDAQ: GOOG). A week later, it's still not clear who was hit harder by the move, Google or eBay. Now it's time to try and examine the impact of this move on both companies. It is difficult to come up with exact, accurate data as, of course, both companies keep such metrics to themselves. I'll at least try to put the little we know/estimate in context.

First Google. It has been suggested that eBay is the single largest buyer of AdWords. What does it mean? According to some analysts, eBay spends $25 million a quarter on advertising on Google. It may not sound much when compared to Google's overall revenue ($3.7 billion in latest quarter), but it does hurt, and also sets a dangerous precedent for other advertisers.

Now eBay, which is a little more tricky:

According to CNBC, the feud between Google Inc. (NASDAQ: GOOG) and eBay Inc. (NASDAQ: EBAY) could get a lot worse. Last week, eBay pulled its ads from Google in an apparent protest to Google Checkout's (a leading Paypal competitor) "Let Freedom Ring" party being held the same week as the annual eBay Live event. Sensing that it had acted insensitively, Google canceled the party, but eBay still hasn't come back.

eBay CEO Meg Whitman claims that she's not worried about Google Checkout, and denies that pulling the ads was a coordinated act of retaliation, although she admits to being none too pleased with the timing of Google's party. eBay doesn't allow Google Checkout as a payment method on its site, and essentially said that eBay would crush Google Checkout the same way it crushed Yahoo! Inc. (NASDAQ: YHOO) and Amazon.com Inc.'s (NASDAQ: AMZN) efforts at building auction sites.

Whitman said, "We're defending ourselves aggressively with PayPal. That is one of our core businesses. We're not going to let that go away to someone who'd kind of like to be in the business."

She's right that it's one of eBay's core businesses, but I wonder how successfully eBay will be able to defend it. The fact that it had to take the step of not allowing it as a method of payment on the site indicates that eBay can't really crush it on the merits: Google Checkout is a formidable competitor only a year into its life. eBay investors might want to look out. With the auction site in a slump, competitors making inroads into Paypal could spell disaster for Whitman and company.

eBay (NASDAQ: EBAY) has pulled all of its AdWord marketing dollars from Google (NASDAQ: GOOG). The online auction site is one of the largest buyers of ads from Google.

It would appear that eBay's action is revenge because Google planned to have an event for eBay PayPal users at their big annual meeting in Boston. The search engine party was to be called "Freedom Party", and was aimed at getting PayPal customers to consider the competing Google CheckOut system. The party has since been canceled.

NetRatings says that eBay was the largest single buyer of AdWords in the first quarter, using them to drive traffic to sections of its auction business.

The problem highlights issues that Google will have as its extends itself into new businesses. It is not hard to imagine that sections like Google Finance and Google photos could compete with smaller companies and that over time, these firms might opt not to use the large search engine for their market.

The price of success.

Douglas A. McIntyre is a partner at 24/7 Wall St.

I thought that the midst of the holiday season was as good a time as any to revisit one of my favorite subjects: Checkout vs. PayPal.

Quick recap to those unfamiliar: Both are online payment services. PayPal, wholly owned by eBay Inc. (NASDAQ:EBAY), is a longtime (8 years) established service operating in over 100 markets internationally with over 123 million users. Checkout is a service Google Inc. (NASDAQ:GOOG) developed and launched in June 29 of this year. Originally dubbed "PayPal killer," Checkout has actually been slow in getting traction.

Lately, both companies have offered holiday incentives, with PayPal offering buyers cash rebates until May 2007 (a long holiday season) while Checkout waiving merchant processing fees until the end of the year. Well, maybe the incentive has been working for Google Checkout since it is now extending the free use of its payment service to online merchants through the end of next year.

I don't think PayPal will respond in kind; it is too busy getting new customers as just yesterday it signed Monster Worldwide Inc. (NASDAQ:MNST), the global online careers and recruitment resource. PayPal will be available as a payment method on Monster's eCommerce site as it becomes the first online recruitment site to offer PayPal.

While competition is always good for consumers, as is already apparent from the different promotions (although PayPal gives incentives to buyers while Checkout gives incentives to sellers), it seems that Google Checkout still has quite a bit of work cut out for it. I hope it could compete with PayPal one day on the same level, yet at the same time, I doubt this day would come any time soon.

Remember that just the other day eBay, Inc.'s (NASDAQ:EBAY) online payment service, PayPal, announced a holiday promotion? Well, guess what. Yesterday Last week, Google, Inc. (NASDAQ:GOOG) also announced a holiday promotion for its online payment service, Google Checkout.

Google checkout will be waiving processing fee for merchants until December 31. Google Checkout, only a few months old, hopes that with this promotion more retailers might try it out. This promotion could attract merchants who haven't been using Google's ad service, AdWords, as those who do already received rebates and other promotions to render fees effectively null.

As I mentioned when PayPal announced its (very long) holiday promotion, the company is targeting mostly the buyers as the buyers can get up to $20 in cash rebate. Google Checkout , on the other hand, targets the sellers (as it had been doing all along). With Checkout's very limited exposure, especially compared to PayPal's huge user base, I don't see how Google's strategy is going to work.

Say I am a merchant and buyers want to buy my products using PayPal (because they'd get a rebate), otherwise, they'd probably not buy. I'd rather get a sale and pay some fees as opposed to not making a sale at all. Of course, the other option would be to lower prices, but that gives everybody the same result at the end as offering PayPal. So why wouldn't I offer PayPal?

Once a site offers PayPal, buyers will most likely prefer it over an unknown service. Even if the service is from the mighty Google. I'd say it's not even a contest.

After doing some research recently on the newer Google Checkout payment system offered by the world's largest search company (but wanting to be more, of course), a recent ad showed up in my email from buy.com, a company I have done business with many times. Amazon.com is a great place to shop, but I'll search buy.com on occasion to find a rare item I just can't find anywhere else.

Although Google Inc. (NASDAQ: GOOG) has been pushing out the Google Checkout system for a few months now, the highest-profile co-branding campaign I have seen is with Buy.com -- see the ad image here?

Ever since eBay locked out the use of Google Checkout on its site (no doubt to rid competition for eBay's PayPal system), Google Checkout has allied itself with many other web properties, like Starbucks.com and Ace Hardware. While those are large names, they can't hold a retail candle to Amazon.com in the area of Internet retail sales.

My point, you may ask?

Maybe it's time for Amazon.com (NASDAQ:AMZN) to offer Google Checkout as a payment selection. It's hard to imagine many Internet-savvy customers these days who have not purchased anything from Amazon.com -- and therefore have their payment information stored at the online retailer. But giving yet another choice to consumers -- especially a new one -- might just be a good idea.

After all, marrying the world's largest online retailer with the world's largest search company is probably not a bad thing for either. Some think Google Checkout is a huge threat to Amazon -- I say, let them work together. It's all about serving consumers and increasing sales, isn't it?

As I've mentioned this morning, several bloggers have reported seeing Yahoo! search ads featuring a small shopping cart icon next to them (much like Google's Checkout cart), but of course pointing to PayPal.

We all remember that eBay and Yahoo partnered up so that Yahoo! would offer PayPal as a form of payment on its searches. It wouldn't be surprising then if Yahoo! was indeed testing the feature. Even in the form of a nearly identical Google Checkout shopping cart. Many sites use the shopping cart icon, not just Google Checkout, right?

However, I've tried many search items myself and never once came across the icon. Also, the only image I've seen with the shopping cart icon in a Yahoo! search around the Internet has been the same one that Traffick posted on Tuesday. This caused some to think this could be a hoax, however, Search Engine Journal claims receiving confirmation from Yahoo! that they are testing the feature.

Interesting to see where this would lead, if anywhere at all.

eBay Inc. (NASDAQ:EBAY) shares closed at $28.05 today, up 5 cents or 0.18%.

On June 29 Google Inc. (Nasdaq: GOOG) launched its anticipated online payment system, Google Checkout, which was immediately dubbed "PayPal Killer" by some. According to this Dow Jones article, since then, the service hasn't gained much traction. Or should I add, "yet"?

The problems with Google Checkout seem to include long processing time, orders that are never filled, no phone-based customer support, a few technological problems as well as a glitch with the Checkout icons which were placed on Web sites by accident.

Sellers have also been slow to adopt Checkout and according to a survey performed by Piper Jaffray & Co. of 40 large online stores, 81% of them said they wouldn't use the service. Bad news for Google, good news for eBay. The survey also found that the control issue I mentioned shortly after Checkout was launched, is an important one to retailers, both in terms of transaction process control and customer information. Looking at the fees also, Checkout isn't always cheaper than PayPal. All this explains merchants' unwillingness to convert to Checkout and why some early partners remove it altogether (as Levi Strauss & Co. had already done).

Google found out, as others have before, the difficulty of taking on PayPal. EBay Inc.'s (Nasdaq: EBAY) PayPal is eight years old and has been the leading online payment service for quite some time now. With over 100 million accounts in 50 countries, $9 billion worth of transactions processed in Q2 2006 alone and a few thousand employees, it would be hard for anyone to take it on.

However, Google has made big strides so far. Checkout has signed up about 270 retail partners in its first two months alone and is promoting the service heavily using its AdWords advertising.

I don't think Google will just roll over. It has begun to fix certain issues -- mostly those pertaining to fraudulent orders. However, sending T-shirts and other presents to dissatisfied customers isn't going to cut it. Consumers don't like people fumbling with their money and would rather use another, more reliable, service.

eBay's competition was busy today.

First, the Gmarket IPO was a success, raising $139 million.  Gmarket is eBay's competitor in South Korea.  Yahoo Inc owns 10% of Gmarket.

Then, Google's long awaited Checkout (not the speculated GBuy), was launched early in the morning.

EBay shares were off Tuesday to a 52 week low when a WSJ article suggested that Google Checkout would be released as early as this week.Yesterday, however, eBay stock has already rebounded and today, it turned out once the genie was out, that it wasn't so bad. Indeed, Google Checkout is different from PayPal on many levels.

I've been surfing the blogosphere to get the sense of what people think of the new Google (GOOG) service compared to the existing PayPal and it seems most aren't that impressed with Google Checkout and many agree the benefits to the buyers seem minimal at the moment.

• One problem many cite is the fact that Checkout is limited only to US merchants while PayPal just keeps increasing the number of countries it operate in.
• The presumed appeal to buyers - giving out credit card information only to Google instead of many different merchants - can also be the downfall.  Do consumers really trust Google with that much information? Many are quite suspicious.
• From a merchant perspective, though, transactions costs are lower to nil, especially for AdWords and AdSense users.

For current PayPal users (buyers) there doesn't seem to be incentives to switch to Google Checkout. For now, I think, PayPal is well positioned. If, however, many merchants will switch to Checkout, we'll have to see who wins out - the buyers (assuming many are sticking with PayPal) or the sellers (assuming some are switching over).

eBay shares were up 51 cents today (1.77%) to $29.26.  Google shares by comparison were up $11.70 (2.88%) to close at $417.81.