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Google vs. Ebay, The Battle Continues

Published: May 31, 2007

Author: David Rodnitzky

Type in any product on Google and you’ll notice something interesting at the top of the page – two links, one that says “web” and the other that says “products.” These links are right below the search box and right above the first three sponsored links.

When you click on products you are, of course, taken to Google Base. Now take a look at the top of Google Base – you’ll notice that there are two prominent sort options “Show all items” and “Show Google Checkout items only.” It should be noted that Google Checkout is also prominently displayed (in some cases, with a full-color logo) on the paid ads of participating merchants on Google itself.

No doubt the combination of prominent placement for Google Base on the search results, and the prominent placement of Google Checkout in search results and at the top of Google Base will lead to a lot more business for both products.

And, as I have noted in prior posts, these are two products that are directly intended to take marketshare away from eBay, with Google Base being a direct competitor to Shopping.com, Rent.com, and eBay (all of which are owned by eBay), and Google Checkout being an obvious attack on PayPal.

Imagine what would happen if Google Base expands its reach beyond new items from merchants and starts to offer used items, sellable by anyone. And perhaps not just ‘buy it now’ used items, but also items that people might want to, oh I don’t know, auction? And since Google could monetize this traffic through a combination of Google Checkout fees and AdWords ads, it wouldn’t be that crazy to think that Google would just offer auctions for free.

And unlike other failed attempts to capture part of eBay’s auction market (Yahoo, Overstock, etc), Google’s immense traffic would enable them to create a marketplace of buyers that past eBay competitors failed to ever accumulate.

As I noted last week, I find it interesting that eBay is considering a purchase of StumbleUpon. Past eBay acquisitions have all seemed logically related to their core business model – the online marketplace. This would include actual marketplaces (StubHub, Rent.com, Half.com), and enablers of online ecommerce (Skype, PayPal, Shopping.com).

So the acquisition of an innocuous Web 2.0 toolbar seems out of place, until you consider the potential for social media search (collaborative filtering) to someday provide more relevant search results than an algorithmic search engine. If that is indeed possible, then suddenly you could see eBay gaining search marketshare at Google expense. And with more marketshare, it becomes possible to further grow eBay’s core businesses.

In other words, Google is trying to grab marketshare from eBay by promoting eBay killers through its search dominance, and eBay is trying to grab marketshare from Google, by gaining search dominance to protect and grow its existing properties.

Meanwhile, Microsoft still controls the browser, Ask spends millions on a bad advertising campaign, and Yahoo loses c-level executives (Yahoo does have a social media strategy, but I have yet to see it really take off in any meaningful way).

The battle for search dominance is really the battle for online dominance. And despite Google’s current catbird-seat position, it’s still too early to declare a winner. Technology, user behavior, and smart competitive moves will make this race very interesting over the next several years.

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