Saturday, April 22, 2006

eBay Worried About Google

Auction giant reportedly talks to Microsoft, Yahoo on how to compete with search king.

eBay is reportedly in talks with both Yahoo and Microsoft on how they can work together to counter the threat from Google.

According to an article in Friday’s edition of The Wall Street Journal, the San Jose, California-based online auction giant began separate talks late last year with both companies on how they could cooperate with one another to fend off competitive threats from the search engine company.

Citing sources close to eBay, the article said such a deal, if struck, would likely entail eBay promising to increase ad spending with the partner company, as well as sharing consumer data. It could also entail tighter integration of their IT systems, the article said.

The sources did not say how much money would be involved in such a deal, or whether it would involve the firms taking a stake in one another. However, they did say it could ultimately result in some kind of merger or acquisition.

An eBay spokesperson declined to comment on the talks.

eBay has good reason to worry, as Mountain View, California-based Google has increasingly been encroaching on its online commerce turf. Last June, for example, Google announced that it was developing a secure online payment system, and in October it began testing Google Base, a free online service for classified ads (see Google Expands Search All Over).

eBay is also a large Google customer, with $400 million of its annual online-marketing budget going to Google, according to the WSJ article. The company sees a need to wean itself from its dependence on Google, said the article.