eBay wins skirmish

eBay LiveeBay spends a significant amount of money buying Google AdWords.

Google is an aggressive company. It didn’t get to where it is by being namby-pamby.

Two years ago, rumor has it that Google recruiters showed up at eBay Live in San Jose. They tried to recruit the eBay employees who were manning the booths and doing their jobs interacting with the eBay community. To me, that crosses the line. More than offensive, it is just bad business practice – you don’t show up at your customer’s offices/events and try to recruit their employees. I’m not sure eBay said or did anything.

And now, at eBay Live 2007 in Boston, Google decides to take on one of its largest customers by throwing a party to promote Google Checkout to eBay’s large sellers. This doesn’t violate any law, but it just might piss off said customer, don’t you think?

eBay finally (!!) displayed a backbone and stopped buying AdWords. Google then backed down.

About freaking time. eBay has been way too nice believing everything that Google spouts, “in good faith”. And honestly, eBay is to blame for being so trusting – this is a cut-throat business! Google crossed the line first, so screw good faith. The gloves are off, do what you do need to do.

But it seems to me that eBay has played the chip it had. And stopping advertising spend hurts eBay too – it doesn’t spend money with Google to be charitable. It does so because it brings in customers. So, now what?

eBay won the skirmish, but my guess is that Google is in the checkout game for the long-term and will keep improving its currently-sub-par-product and keep coming after eBay anyway it can. This is going to get very, very interesting – grab a seat!

Updated on 6/19: I just saw that Will Hsu has a good post on this as well.

Updated on 6/20: After reading Alex’s post on the topic, I think asking them to leave the Gala is just silly. I mean they would have been two unnoticed guys and now instead there is a bruhaha.

Note: Three points I need to make in the interest of full disclosure

1. I was an eBay employee for five years.

2. I believe Google is a cool and innovative company in many ways.

3. This post is my own personal opinion and does not reflect eBay’s point of view. It really can’t reflect eBay views since I haven’t worked there in a year, but I am still covering my ass and being really, really clear! πŸ˜€

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  • Great post, Shri. I’ll refrain from posting my opinion on this matter for a variety of reasons. This should definitely be interesting to watch!!!

    My disclaimers are the same as Shri’s. πŸ™‚

  • here is a potential 15 day solution . . . (ie not sustainable)

    ebay increases spend on yahoo/msn to make up for the lost google traffic. In turn Yahoo/MSN gives back enough discounts to ebay to make the switch as painless as possible . . . then ebay uses affiliates to backfill on google paid search

    in the end, ebay need to build enough competing products to Google to be able to trade chips . . . money is not a currency that Google cares about (yet) . . . .

  • My colleague and I got thrown out of eBay Live by eBay’s VP of Marketing, for wearing Google insignia and promoting our website that uses Google Checkout. Whatever happened to free markets and competition?

  • “Whatever happened to free markets and competition?”

    Alex,

    when you throw a dinner party at your home for your family, you probably dont want me to crash that party . . . same case here . . . πŸ™‚

  • Shripriya

    @ Greg – come on! Be bold πŸ™‚

    @ Will – I agree. But what are the alternatives really? Search is a one-man show. And even if you can get the other channels to replace current volume from Google, the lure of potential additional volume from Google will always be significant. Seems like a tough spot to me.

    @ Alex – I agree with Will on this one. Nothing against free markets, but this was an eBay event. And to be clear, eBay has never said that they will allow any service onto the platform…

  • Will makes a valid point, however all the power sellers we met that night were extremely interested in our store-builder solution and Google Checkout. There was a lot of resentment towards increasing fees charged by eBay and PayPal.

    eBay solution is slowly becoming just another search engine (an expensive one too). They might have won the skirmish, but they know they will loose the war. It might be time for eBay to get their act together and learn how to play well with others.

    If they truly cared about their users we would not be having this conflict in the first place.

    alex

  • Shripriya

    @ Alex – eBay may well lose the war, but it depends on how buyers find things and what shopping experience eBay can offer.

    Let me give you another example – right now, on Google, for AdWords, they will list you with a little shopping cart icon if you use Google Checkout. They will not give you that icon if you use PayPal.

    However, it is their search engine and they are entitled to set the rules on what checkout service you need to use to get that extra promotion. There is no way at all that Google will give you an icon and say “Uses PayPal”.

    By the same token, eBay won’t allow you use Google Checkout on eBay.

    Can you use Google in your own store? Sure. Can you use PayPal in your own store? Sure. It is just that *both* competitors refuse to promote the competing payment service on their core site…

  • * note to Shri & Greg: um, you don’t have to do CYAs anymore… in case you guys didn’t notice, YOU DON’T WORK THERE ANYMORE! πŸ˜‰

    however, more to the point: if you really believe in your old business & colleagues, you may find it’s more productive to give them some tough love & honest opinions, rather than defending questionable business strategy or practices.

    whether or not you think it’s ethical for people who are pimping Google Checkout to crash the party and try to recruit eBay employees, it’s just simply stupid for eBay to eject them physically — that attracts negative PR, and draws unnecessary attention & sympathy to a competitor. grade = D.

    – dave mcclure

    (disclaimer: i used to work at PayPal / eBay too from 2001-2004, and i gave them just as much hell when i worked there as i do now πŸ˜‰

  • Oh, Dave. How I’ve missed you! πŸ™‚

    If anything your post has prompted me to spend more time on your blog. You’ve written some great stuff…where do you find the time?

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