June 14, 2007 | Thursday

eBay makes Google back down…for now

By Jackie Danicki - Blogger in News |PPC |Search Engines |Google

Only a few weeks ago, I blogged about the Google face-off with eBay and its PayPal product, which is becoming a bank in order to more mightily fight off Google Checkout. I said at the time that this move on eBay’s part was “certain to kick things up a notch in their battle for supremacy.” That was an easy prediction to make, but it hasn’t taken too long for the contest to heat up. Here’s what’s happened:

A year ago, Google announced its Google Checkout offering, which was somewhat competitive with eBay’s PayPal (at least for merchants). This was worrisome enough that eBay banned Google checkout from its site. This past Monday, Google announced a somewhat childish plan to hold a protest meeting outside eBay’s own conference. Apparently, eBay has responded in a big way: by removing all their US ads from Google.

eBay’s official line is that yanking all their US ads from Google is just a bit of “experimentation” with “ad dollar allocation”. But the consequences of such games could be severe for Google.

Considering how much money eBay puts into Google’s bank account, this isn’t a small deal. This is a warning shot from eBay to Google that becoming too directly competitive could mean that one of Google’s top ad buyers will move somewhere else. If it’s true and if eBay can really resist advertising through Google, this could have a huge impact on Google—not just in the loss of so many ads, but also in driving down the cost auction price on ads where eBay has been an active bidder.

Guess what? Google cancelled their planned protest. Watch this space for news of the next digital chicken-fight.