The Biz of Coding

Why eBay Inc. is worried about Google

by Ujwal Tickoo on April 26th, 2006

This post is a continution of my previous post on Google’s Strategy. I will now use the example of eBay Inc. to explain what I stated previously:

The long term result of this "we do everything" un-strategy will be the same results that Microsoft (MSFT) is not very unfamiliar with today:

• animosity and mistrust by other Tech firms
• slow but sure exit of talented and sensitive employees
• diassociation of the term "innovative" with the company
• stagnation of stock prices

Several recent media reports suggested that eBay Inc. (EBAY) is in talks with both Yahoo (YHOO) and Microsoft (MSFT) to fend off the threat from Google Base. According to one of the reports by Elizabeth Judge in The times about eBay Inc.:

Though eBay, which was founded in September 1995, already advertises with the three search engines Google, Yahoo! and Microsoft — and is linked to Microsoft through its MSN service — the bulk of its spending has traditionally been with Google, which accounts for about 42.3 per cent of total search queries.

The relationship had proved fruitful for both, with Google directing its users towards eBay’s buying and sale site. But recently Google’s status as a potential threat to eBay, as its empire-building continues, has become more apparent.

Though Google has officially denied that it is seeking to woo away customers from the auctioneer, it has begun to move into similar areas.

Last year Google launched a new service called Google Base which, like eBay, allows web users to meet online to buy and sell goods and services. The service has already caught on, with around 45 million listings.

Unlike with eBay Google Base customers pay nothing to list their goods.

Google, launched seven years ago, has also launched a payment service to handle credit card processing for customers — like the eBay owned PayPal.

It is quite clear that Google’s un-strategy of trying to be both a search engine serving ads along with a portal like provider of eCommerce and Content services will make it a untrusted entity in the Internet world.

To be continued…

POSTED IN: Google, Strategy, eBay