eBay rumoured to be starting 'anyone but Google' alliance

Posted on 24 Apr 2006 at 10:26

Auction giant eBay is courting various technology partners including Yahoo! and Microsoft in order to help it fend off a challenge from Google according to a report in the Wall Street Journal.

Reports of the approaches range from co-operation to a full blown merger, although such a deal would undoubtedly attract the attention of the US competition authorities.

eBay has watched with growing alarm over the past few months as the search engine has made a series of announcements that put it in direct competition with eBay's core businesses. Among initiatives announced are Google Base, VoIP capabilities in Google Talk and persistent rumours of a PayPal rival named Google Wallet.

However, eBay will be distinctly ambivalent about Google. The auction site has bid top prices on thousands of keywords on Google AdWords to raise awareness and drive traffic to its services. The biggest slice of its reported $400 million marketing spend is currently with Google and eBay executives will be unhappy that they are shovelling huge amounts of cash to feed a company which is turning into a major competitor.

The Financial Times is reporting that eBay is holding a beauty contest with the three big search engines on which will have the right to place their contextual advertising in front of eBay's millions of customers. The eBay visitors are one of the last big untapped audiences not colonised by one or other of the big search engines.

The eBay opportunity is almost a rerun of the AOL bidding war of last year which ended when Google fought off a rival bid by Microsoft. After hard fought negotiations, Google bought a five per cent stake in AOL said to be worth around $1 billion in order to win the rights to manage the advertising to the ISPs subscribers. Any deal will certainly involve placing the eBay keywords alongside the winner's search results at reduced rates. Even though the company's AdCenter contextual advertising service is still not fully operational, Microsoft and CEO Steve Ballmer will be determined to win the eBay business this time.

Author: Steve Malone