eBay v Google: the new World Wide Wrestling giants

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Thursday, 14 April 2011 20:31

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Anyone who has ever tried wrestling, even at beat-up-your-brother-in-mock-playfight-that-isn’t level, knows that size matters. Snazzy moves, spirit and willingness to do it aside, the kid with the tonnage is usually going to win. This is exactly what makes school playgrounds such great hothouse modeling landscapes for the world at large.

In the playground of the Web two companies stand out for sheer size: eBay with its ubiquitous presence and online auctions in almost any part of the world you care to mention and Google which is the only natural choice when it comes to online search results which really mean something.

Each, in their own fashion, have expanded their activities and sought synergies and partnerships where they make sense and, because we also talk money, they have not stopped at working with each other. eBay is Google’s largest adwords customer with over $100 million a year spent with Google.

In return between 10 and 20 percent of the total of eBay’s customers are led to the site thanks to Google ads. So the moment eBay decides to yank its account there is hurt on both sides and there has to be a good reason why this is happening.

In the Web playground the stakes are usually bottom-line driven and counted in billions and this spat between two giants is no exception. Eight out of ten online US transactions are made through PayPal, Google’s online payment system, worth to the group about $1.4 billion a year.

Earlier in the year Google rolled out Google Checkout, its own payment system which, though taken up by many is still slow at catching on. Google, has its eye on eBay’s online customers who in both their seller and buyer formats are well versed at using online payment systems and which represent a sizeable chunk of the web-savvy population. So the moment Google announced a party for eBay customers with a view to promoting its online payment system, eBay saw red and reacted sharply.

The result is that eBay whose ads served by Google in March 2007 topped the 188 million mark is suddenly going to disappear from Google served ads and Google, who used to count on $100 million in revenues each year will now find a small hole in its finances.

For Google the fallout might be a little more catastrophic. The company, operating in an unregulated market, has promoted itself as a benign Big Brother, massing information and behaving ethically in everything it does, from fighting Click Fraud to promoting online business practices. This underhanded movement concerning eBay (the Google party in the US was scheduled on the same day as eBay’s own party to its sellers) smacks of tactics used by Microsoft whom everyone used to love to hate.

While hating Microsoft was ok because they did not have all your details or the means to amass them to the degree Google does, for Google a public change in perception of the nature of its ethics may have heavier repercussions as it will start feeding its critics and will erode its online base of supporters who believe that Google has, at its core, online user ease of functionality and convenience as its sole guiding principle.

What will determine what happens next is Google’s counter-response. A public apology and an honest explanation may make its critics sense that Google is being forced to eat humble pie but it will leave Google’s reputation with those who like it, intact. An adverse tit-for-tat reaction on the other hand may begin the process by which we will, in retrospect at some point, be able to mark as the beginning of the downfall of a search engine giant.

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