Saturday, June 23, 2007

Google and eBay kiss and make up, but not the same as before

Google launched a service, Checkout, to rival eBay's Paypal, the most popular online money payment system. So far, so good. Remember, these 2 are closely related in terms of business, with eBay being the largest advertiser on the Google ads network. And then suddenly, 2 weeks before, there was a major clash.
eBay had planned an event in Boston, its annual user conference. Google, in a clash, disclosed plans for a party in Boston at the same time so as to lobby eBay to also start using Checkout. eBay was not very happy about this, and termed this as unworthy of a partner and, to send a stronger signal, discontinued all search advertising on Google. Even though it is not known whether this boycott had any affect on Google, it would have wanted to bring this confrontation to a halt. Advertising revenue after all, is the money source that brings in almost all the revenue for Google and it would not want anything to cause a problem on this front. In addition, there were reports that eBay did not suffer much due to this lack of advertising, since search results (the non-sponsored ones) also brought people to eBay from Google.
Anyhow, the relationship is now on track, but seems to have benefited Yahoo, AOL and Microsoft, since eBay claims that it will move some of its business to these alternate advertisers:


The animosity started nearly two weeks ago after Google disclosed plans for a party in Boston that coincided with eBay's annual user conference in the same city. Google's event was intended to lobby eBay to start accepting Checkout, a rival online payment service to eBay's PayPal.
"The major takeaway is that we aren't as dependent on Google AdWords as we thought," said Durzy, referring to Google's advertising program. EBay had been the most prolific advertiser on Google, according to comScore Networks. Whether eBay or Google suffered financially because of the brief pause in eBay's advertising is unclear.


Google would have suffered to some extent, also because the advertising revenue has to keep on increasing at a decent pace every year so as to meet the expectations of the stock market and investors.

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