Jun 15

Nikolaj Nyholm

Nikolaj Nyholm

"eBay went straight to the nuke"

The title above was makester Phil Torrone's gut comment on the radar backchannel to eBay's decision to cancel all their US-based ad$ on Google in response to Google's 'Freedom Party'. The Freedom party was meant as a friendly but prominent reminder of eBay's unwillingness to let Google Checkout onto their platform.

Fellow Radar-blogger Marc Hedlund quickly pointed to the likely core of Ebay's strong reaction:

I recently read "The PayPal Wars," which describes the growth of PayPal (from their marketing director's POV) from launch to acquisition by eBay. One of the stories was about PayPal crashing eBay Live, when eBay was trying to promote its own payment service. It sounds like Meg Whitman got up at her own conference and saw about 1/4-1/3 of the audience in PayPal shirts -- given away at a party just like the one Google was proposing to throw.
I would bet eBay decided they never wanted to repeat the experience.

Update: Read Dave McClure's comment below for more insight into the PayPal t-shirt revolution party that he took part in putting on.

Google has since canceled the Freedom Party with the excuse that "eBay Live attendees have plenty of activities to keep them busy".

Where's the nimble startup ready to challenge eBay in a powerplay without the risk of losing a three-figure $ million revenue stream, and when will eBay recognize - like Facebook - that they're a platform and not a closed bundle of applications.

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Comments: 11

  SS2BM [06.15.07 07:40 AM]

Google could benefit from the upcoming SS2BM (Summer Solstice to Blue Moon) promotion.

  Keith Teare [06.15.07 08:21 AM]

Hi Nikolaj

Long time no see.

Just wanted you to know that edgeio has APIs and our data set includes all of eBay, Amazon, CafePress and our own 4m or so organic listings.

Any merchant/classified player can upload their data into edgeio via self-service api's (see edgedirect faq's on

What do you think?


  Bob Warfield [06.15.07 08:39 AM]

eBay could be a platform, but they don't think that way. Look at their executive backgrounds: Disney, Pepsi, Hasbro.

They are not techies, they're from the school that says you own the brand relentlessly and milk it for every last cent. Long tail? Forget about it.

Worse, they've reached a scale where megagrowth has slowed. Their view is that the only way to keep growing is to increase share of wallet.

eBay has never been interested in creating an ecosystem around their franchise. Many have tried, and eBay themselves have often blocked the opportunists or taxed them so highly it wasn't an interesting venture to continue with.

The network effects of the auction world are some of the most powerful of any market, so they're not going away and you can't compete with them.

Welcome to the dark side of the Internet. Originally viewed as a place that would make diversity more likely, we have to come to grips with the fact that eliminating all friction allows ideas with a slight advantage to take over that much quicker. The oceans were a blessing in allowing Darwinian evolution to flourish in different ways in different places. Without such barriers, we see how quickly just a few species take over.



  So? [06.15.07 08:54 AM]

Pfffft. Big Money is as Big Money does. I, for one, won't miss all of the Ebay ads on my Google search results. Many of Google's paid-for results are useful but the Ebay ads are one of a growing number of useless catch-alls. Yes, I'm sure I can find humming bird feeders (or whatever) on Ebay. But, I'm actually interested in discovering the small, specialty businesses and sites that are out there.

Good riddens.

  jdavid [06.15.07 10:57 AM]

this is just something that was bound to happen as google is being pushed to a CPA(cost per action) model. Now that google knows ebay has left, they can roll their own auction site, i am going to guess its going to be called google auction base. ok, well maybe not but between google base and google checkout why wouldn't work?

  Dave McClure [06.15.07 03:26 PM]

actually, I was part of that PayPal t-shirt revolution party we threw at the first eBay Live... it was a real blast. And we did end up getting over a thousand people to wear the t-shirts at the conference the next day. one of the best guerrilla marketing campaigns we ever pulled off, and perhaps not a small influence on meg's eventual decision to buy the company later that year.

but i'd agree with BobW above -- eBay's DNA has never really been about making a platform play. altho there are still some smart people over there, the decision makers are mostly business types who can't really see forest for the trees re: technology & platforms. eBay has always had tremendous opportunities if they wanted to take advantage of search & commerce, but for the most part they've outsourced the innovation & simply decided to buy it when they need it.

it's too bad. there was a lot of both business *and* technical talent at PayPal, and i think a lot of that fire has been quenched over the past five years.

still, i'm kind surprised Google didn't go through with the effort... given all the potential marketing benefit they could have with Checkout, i think it's a pretty small price to pay to give up a few percentage pts of ad revenue. eBay may have made a power move, but i seriously doubt they can afford to play hardball that way for very long.

when you get right down to it, Google can afford to give up 3-5% of revenue from eBay a lot more than eBay can afford to give up the 10-15% of revenue they get from Google advertising. and while Google could probably figure out how to eventually replace that revenue, i'm not sure eBay has anywhere else to go if they want to get at the 60-70% market share of searchers Google has.

ultimately speaking, eBay may have won the battle... but they're losing the war.

- dave mcclure

  someone [06.16.07 11:39 AM]

I worked for that [word removed. talk nice, please] of a company.

They actively try to push competitors out of the market, they actively try to be as non-active as possible towards their customers (having a problem with your buy/sell? sort it out yourself). They treat their employees like [another word removed]. They exploded in the last 10 years, but have reached their peak, and are in panic seeking for new revenue to show some sort of continuous growth to the shareholders.

They are at a very vulnerable point right now, so attack!

- from a disgruntled ex-eBay employee -

  Nikolaj [06.16.07 01:38 PM]

@Keith, to be honest it's been a while since I last visited Edgeio (and since I last heard from you!), but it's interesting to see how your organic base has expanded so rapidly.
I'm a bit unsure what qualifies you as a platform, however? I've always seen you as an aggregator (initially of microformat'ed listings) and that still seems to hold true..? Are you qualifying (ranking) buyers and sellers (something that eBay would probably fear losing even more than the payment mechanism)?


  Nikolaj [06.16.07 01:44 PM]

@dave, thanks for sharing the story. i think that your analysis of the opportunity cost for ebay cutting google ad spending, together with @jdavid's speculation that google will roll out their own service makes for a perfect summer conspiracy.

and this makes me understand ebay's strong reaction even better; google checkout is a potential trojan horse which could potentially suck not just the payments - but also the listings themselves - out of ebay.


  Go eBay! [06.17.07 02:42 PM]

I don't care what "Someone" (the ex-eBay employee) said, I am a current eBay employee and believe me eBay is not going away. Even though the market may seem slow, which is bound to happen to any company when it reach its peak. However, looking at the big picture, eBay really has not reach its peak. It is a very young company at only 10 years old. Sure the auctions may be slow, but watch out people, the power of 3 (eBay, Paypal, Skype) are gonna kick some ass in the near future. Trust me, people running eBay are not dumb. They just play dumb.

  Alex U [06.18.07 10:24 AM]

I agree with Dave McClure. Now it is obvious that eBay is afraid of competition from Google Checkout.

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. Follow the link to read more.

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