Ebay feud with Google escalates

Posted Jun 14th 2007 8:00AM by Douglas McIntyre
Filed under: Launches, Competitive Strategy, Google (GOOG), eBay (EBAY)

eBay (NASDAQ: EBAY) has pulled all of its AdWord marketing dollars from Google (NASDAQ: GOOG). The online auction site is one of the largest buyers of ads from Google.

It would appear that eBay's action is revenge because Google planned to have an event for eBay PayPal users at their big annual meeting in Boston. The search engine party was to be called "Freedom Party", and was aimed at getting PayPal customers to consider the competing Google CheckOut system. The party has since been canceled.

NetRatings says that eBay was the largest single buyer of AdWords in the first quarter, using them to drive traffic to sections of its auction business.

The problem highlights issues that Google will have as its extends itself into new businesses. It is not hard to imagine that sections like Google Finance and Google photos could compete with smaller companies and that over time, these firms might opt not to use the large search engine for their market.

The price of success.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Tags: AdWords, CheckOut, eBay, GOOG, Google, PayPal