This Town Ain t Big Enough For eBay

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This Town Ain't Big Enough For EBay

By: Nathan Weinberg
2006-05-24

Reuters says Wall Street is being overrun with rumors of a possible merger between major internet companies.

Link: Reuters

They say that, with growth slowing and slumping stocks at almost every major player

EBay stock is down 30 percent on the year. Yahoo is off 20 percent and Google down 10 percent.

while at the same time competition is intensifying, could all add up to at least two companies merging in order to stay ahead. The obvious merger target is eBay. eBay is a major rock of the internet economy, but has been desperate (and failing) to expand into other areas. eBay's foolish purchase of Skype underscores how badly this company wants to win, but has very little chance.

All Skype really does is make eBay more attractive to potential partners. If Microsoft or Yahoo took eBay, they'd instantly be cemented as #1 in net traffic, as well as gaining the most popular VoIP network for their IM software. Meanwhile, Google makes such a large amount of money from eBay advertising on their search engine, that they would be forced to at least consider bidding, or lose all that ad revenue.

If Yahoo or Microsoft merge with eBay, unless they pay too steep a price, what will emerge is a serious player. Microsoft, more than Yahoo, could use the boost, especially with its search engine taking too long to gain traction. A Windows Live search box on eBay would be quite the boost to market share, and shipping Skype inside Windows Live Messenger could make Microsoft number one in IM.

Microsoft already took A9's web search away from Google, so, while Amazon is another good target for a merger (due to similar troubles in growth), Microsoft doesn't need them. A similar deal with eBay, for sharing of search and IM technologies, is possible, but less likely, since the move isn't big enough for eBay's needs.

And stuck in the middle is Google, which doesn't seem to understand how much it needs some other means of revenue. Google is trying to build online payment and selling systems, but others have tried and failed at that, and nothing Google has done indicates they will be any more successful. Google isn't the type of company to take shortcuts, but, then again, they are maturing. Anything is possible.

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View All Articles by Nathan Weinberg

About the Author:
Nathan Weinberg writes the popular InsideGoogle blog, offering the latest news and insights about Google and search engines.

Visit the InsideGoogle blog.


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