Google Vs eBay

Valleywag reports on eBay suspending its Adwords-based advertising through Google after a recent squabble between the two companies. Apparently, Google scheduled a Freedom Party to promote its own payment service Google Checkout, inviting eBay sellers for free drinks, food and massage. The fun part is that Google scheduled this event close - in time and space - to eBay's Live event for its top sellers in Boston. Google rubbed it in further by giving its "Freedom party" a Boston Tea Party spin. All this because eBay won't allow Google Checkout to be used as a payment option on its website. eBay, of course, wouldn't do that because Checkout is a direct competitor to eBay's own Paypal.

eBay's contributions to Google's coffers are big enough that Google suspended its planned party, when eBay stopped advertising via Google. But the damage is done. eBay continues to boycott Google, although the latter was/is the top traffic driver to the former.

While the party fiasco has been publicized a lot, Google and Ebay were bound to step on each other's feet (not just toes!) sooner or later. The fact is that, Google has its fingers in too many pies which Ebay considers its own right now. Examples include Paypal and Skype. Google also has the potential to bite out a large chunk of Ebay's pies, if it chooses to do so. Offering innovative services and features on GTalk and Google Checkout could give some serious competition to Skype and Paypal. And Google has all the big pieces needed to quickly build an Ebay competitor in the auction and sales space. Perhaps, Google should take this as an opportunity to kickstart the campaign of giving eBay a run for its money.

It will be interesting to see how this war plays out between the two. Even if the current battle ends tamely by eBay turning on some (not all!) of its Adwords advertising, the long term war is far from over.