While most analysts are looking at what the Google-eBay deal means for Google, I think it's time we look at what it means for eBay.
At a single stroke, eBay CEO Meg Whitman (left) has neutered all her main rivals. After signing Yahoo (which tried auctions) to run ads on its U.S. site a few months ago, it has now gotten Google to sign with it on a line which is dotted.
Since buying Skype for way-too-much money, Whitman has been holding one of the poorest hands among the U.S. Internet giants. Skype is proprietary, it still has a very limited business model, and eBay is not really known as a technology powerhouse.
But Google is. And now, with the Google Talk team yoked-on as support (supposedly), the company can get on with the hard work of delivering on its promises without worrying about what might be happening in other Internet boardrooms.
What happens next?
The biggest threats going forward for eBay remain the banks and the
Bells. A Google tie-up helps on both fronts. The combined market cap of Google and
eBay is close to $150 billion. That's still well short of AT&T and
Verizon's combined $220 billion, but whose hand would you rather be
playing right now? The biggest U.S. bank, Bank of America in Charlotte,
is worth about $236 billion. Getting close there too.
When you get valuations this high, the cost of building new infrastructure in the face of recalcitrance becomes something of a rounding error. Should the Bells decide, for instance, to impose Whitacre Tiering, or try to block Skype, it would soon become obvious to the millions of eBay and Google users out there. Should the Bells stick to their guns, the two companies will have plenty of cash to deploy WiFi and even FTTH solutions in selected markets (starting with those their two rivals consider most profitable). Google is already proving this is possible in San Francisco.
And what did Whitman give up to get this Big Brother on her side? Ad rights she wasn't fully exploiting anyway.
Not bad for someone who, according to her own official biography, was running Mr. Potato Head a decade ago. I think she's earned the t-shirt to the right, don't you?