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The Threat to All of Google's Revenue

To be honest, I'm scared and I think you should be also. It all started with something we're all accustomed to and dabble in from time to time: revenge.

eBay (EBAY - Get Report) was upset about something Google (GOOG - Get Report) did -- the details are not important, but it's related to the heightening competition between Google Checkout and PayPal.

Basically, Google was throwing a party in Boston for users of Google Checkout while eBay was having a conference, eBay Live, for its users. It's like two squabbling teenagers. Consequently, eBay, which is Google's largest customer, decided to have some fun. The online auction company pulled all of its ads for a week from Google.

What were those ads, and why is this important?

Well, if you search right now for "Beanie Baby," you'll see an ad on the right that takes you to eBay. eBay served up 188 million ads for Google in 2006. That was almost double the No. 2 advertiser Target (TGT - Get Report).

eBay then claimed that its traffic actually went up on the week that it had no ads. In other words, eBay implied that the ads were meaningless to their business. eBay then stated it would reinstate "limited" ads on Google. A spokesperson for eBay told USA Today, "I will tell you it will be in a much more limited way than it was before."

So what does this mean? Something like 99% of Google's revenue and earnings come from search. Google dominates search advertising, with somewhere between 56% and 65% (depending on which data service you believe) of all searches done using Google's search engine. All of Google's other fine products -- Gmail, Google Maps, Google Finance, even YouTube -- are like a drop in the bucket compared with search.

Try searching your name in Ask.com and Google.com. Which results are better?
Answer Here


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