 Google, eBay battle it out over online payments
Google, eBay battle it out over online payments
By DANNY KING
BLOOMBERG NEWS
EBay Inc.'s Meg Whitman is doing what most Internet chiefs can only dream of: She's beating Google Inc. in at least one corner of the Web.
In recent surveys, the world's largest auctioneer found that less than one of five users of Google's Checkout online payment service was happy with it. At eBay's PayPal, the figure was more than double that. Meanwhile, PayPal, bought by eBay for $1.5 billion in 2002, has widened its lead over Checkout since the holiday season.
"PayPal is a huge home run," Whitman, eBay's chief executive officer, said in an interview. "It's the most innovative Web payment product out there and has done really well, even in the face of a little bit of a challenge from Google."
As revenue growth from eBay's unit slows, Whitman is using other divisions to spur profit at the San Jose, Calif.-based company, which she has run since 1998. Two years ago, eBay paid $2.6 billion for Skype Technologies, which allows users to make telephone calls over the Internet. It also recently expanded its free classifieds site to the U.S.
Nonetheless, Whitman has a long way to go to catch up with the growth of Google, the owner of the world's most popular search engine.
In 2004, the two companies' annual sales were almost equal. Revenue at Mountain View, Calif.-based Google has tripled since then to $10.6 billion last year, while eBay sales increased 82 percent to $5.97 billion. Google's 120 million visitors in May were 51 percent more than eBay's, according to Reston, Va.-based ComScore Networks.
Google also continues to expand its online reach, buying an Internet phone company last week and setting up another showdown with eBay.
As a result, Google shares have surged sixfold since the company went public in August 2004, compared with a 16 percent decline by eBay over that same period.
Meanwhile, eBay's PayPal service, which generated a fourth of the company's revenue last year, has become increasingly important as auction sales growth slowed to 23 percent in the first quarter, half that in 2004.
Google started Checkout in June 2006 in an effort to chip away at PayPal's leadership and drive advertising revenue. EBay doesn't allow the use of Checkout, saying it's an unproven service.
"In the latest survey we did, only 14 percent of Google Checkout users were pleased with their experience," Whitman said in the June 15 interview on "Conversations with Judy Woodruff," which aired on Bloomberg TV on Wednesday. She said eBay may eventually use Google Checkout if more people are satisfied.
In a J.P. Morgan Securities Inc. survey in January, 19 percent rated Checkout "good" or better. At PayPal, it was 44 percent.
Google declined to comment.
Now the two companies may butt heads in another area: Internet communications.
Google last week acquired GrandCentral Communications Inc., which allows users to combine all of their phones into a single number.
Whitman has other ideas, saying she wants Skype to serve as an Internet communications hub, much like eBay's platform, which attracts nine in 10 auction users. Skype allows subscribers to call each other for free and pay a flat annual fee for calls within North America.
Whitman also opened eBay's two-year-old free classifieds advertising site in the U.S. last week to compete with the Craigslist.org site it partly owns. Kijiji.com has sites in more than 300 cities worldwide and includes category listings for items such as jobs, housing and services.
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