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Story URL: http://www.silicon.com/financialservices/0,3800010322,39160215,00.htm

Leader: eBay-Google battle will end in tears
Customers always lose out in online spats...

By silicon.com

Published: Tuesday 11 July 2006

eBay has announced it will ban users of its online auctions from using Google's new online payment service, Checkout.

In the short-term this might help its payment brand PayPal retain its status as a dominant player but in the end it will only cause several negative outcomes.

The first is to boost the publicity of Checkout. As if Google weren't a big enough brand with each new product release getting plenty of press, eBay's ban will give it even more attention.

The second is that it causes bad blood between companies on the internet. Everyone knows that partnerships drive traffic to a website. What's to prevent Google from removing every reference to eBay on its search results as a gesture of retaliation?

Even more importantly, their customers will lose out - as they always do in spats like this. They just want to use the best product and don't care who makes it.

If eBay is steering people to PayPal to protect its own interests, it will backfire with poor customer loyalty.

eBay should also heed Google's global presence. It's everywhere. eBay and PayPal operate in several countries too but PayPal in particular receives much less attention than Google. Google could win the payments war if eBay wants to go head-to-head, so perhaps the online auctioneer should find ways of working with the search company.

On the other hand, you can see eBay's point. If someone steps on your patch (one that's been yours for a few years), you'd get territorial too and take measures to keep them out. And eBay has been careful to point out it's only banning Checkout because it doesn't meet the security and safety standard set in its payments policy.

But taking on Google will be tough even for a more established player such as eBay. We just hope both sides stay mindful of the reason they became the giants they are in the first place - the affection and loyalty of their customers.