Google Gets eBay's Goat

At that point, eBay announced it was pulling its ads from Google to test marketing effectiveness. A more apt description was given by American Technology Research analyst Tim Boyd in a Thursday note: "eBay dumped all of its U.S. AdWords bids into the Boston Harbor in response to a 'Google Checkout protest party' at eBay Live in Boston."

After eBay pulled its ad dollars from Google, the search giant suddenly decided to cancel its party. "eBay Live attendees have plenty of activities to keep them busy this week in Boston, and we did not want to detract from that activity," the company commented coyly in a follow-up blog entry.

Shares of eBay were recently up 28 cents to $31.76; Google was off $2.57, or 0.5%, to $502.67.

But Google's ploy smacks of desperation. The company has been promoting its high-profile Checkout service, which debuted in 2006, with aggressive discounts and promotions.

But despite the enticements, Checkout continues to get trounced by eBay's much older and more established PayPal service.

In March, PayPal processed 68 times as many transactions as Google Checkout, which garnered only a 1% market share, according to research firm Compete. That's despite an estimated $60 million Google has spent to push Checkout.

"For all its marketing muscle, Google has yet to make a compelling case to consumers as to why Checkout is even needed," Compete wrote on its blog. "Without a strong consumer valuation proposition, Checkout has been unable to make any headway against PayPal."