Curbing Ad Enthusiasm
For starters, eBay tends to rank highly in Google's search results as is, thereby curbing the need to advertise on the search engine, says Durzi. Google rivals such as
Yahoo!(YHOO Quote - Cramer on YHOO - Stock Picks), Microsoft and
Time Warner's(TWX Quote - Cramer on TWX - Stock Picks) AOL were also more than willing to step up and help eBay garner more traffic.
That's good news for eBay, because a showdown with Google is inevitable. With its auction business sagging and its Skype Internet telephony service still too young to really move the bottom line, eBay is now counting on its PayPal service to be its growth engine.
But the
Checkout service Google launched in 2006 to much fanfare competes directly with PayPal, which it was widely expected to sideline.
"PayPal has been undervalued since the first rumors that Google was going to launch Checkout," says Boyd. Still, despite aggressive pushing by Google,
PayPal has trounced Checkout thus far.
Google also has bigger e-commerce ambitions. The company recently stepped up its Product Search, which allows users to look for items, and tied it in closer to its main search engine.
For eBay, continuing to be the largest customer of a company that was increasingly becoming a bigger rival makes little sense. And eBay management's ability to sidestep Google's advances by focusing on the quality of the three products it has -- compared with the hundred or so that Google is developing -- should be commended.
Vishesh Kumar
RSS
