Google breaks ceasefire with eBay

Google is promoting Checkout, its online payment service, on the search engine's front page, and offering shoppers a $10 bonus to set up an account. On the surface, it's a mildly aggressive move, reminiscent of rival Paypal's inducements to users. But Google's new promotion is more. A former executive at eBay, which acquired Paypal and made it the default payment option on the online auction site, tells Valleywag that the two giants agreed tacitly in 2003 to stay out of eachother's turf. Google never tried invested much in Froogle, which helps explain why the shopping comparison engine was stillborn. eBay paid Danegeld by guaranteeing advertising expenditure on the search engine, which explains why eBay ads used to appear against even the most inappropriate search keywords. As recently as last August, the two companies were still trying to avoid conflict. But Google makes it easy for small retailers to advertise against search terms, attract visitors, and take payment. eBay does the same, but all within a monolithic site. The two companies were always destined to compete; and the ceasefire is now over.

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