EBay Inc. has pulled all of its advertising from Google Inc.’s U.S. network in what is widely seen as punishment for trying to crash eBay’s user conference in Boston this week.
The move exposes the widening rift between eBay and Google, as they increasingly compete on new products, making a public showdown inevitable, according to analysts.
“We’ve seen that the two companies have been on a collision course for a long time,” said Derek Brown, an analyst for Cantor Fitzgerald. “This seems to be the latest and most bizarre twist.”
San Jose’s eBay cut its advertising Monday shortly after Google unveiled plans for a party in Boston to hawk its online payment service, Google Checkout. Attendees of eBay’s user conference, eBay Live, which starts today, were all invited for free drinks, food and massages.
Called the Google Checkout Freedom Party, the event was intended to lobby eBay to start accepting Checkout, a rival to eBay’s PayPal. Since Checkout premiered last year, eBay has banned it from its online marketplace, saying that the Google service had yet to prove itself in terms of fraud protection.
Hani Durzy, an eBay spokesman, declined to say whether his company pulled advertising on Google in retaliation for the party. But he did voice disappointment in Google for the event, saying, “We didn’t think it was the way for one partner to treat another.”
On Wednesday, Google canceled the party, a day before it was to take place at the Old South Meeting House, just a short trolley ride from eBay Live at the Boston Convention & Exhibition Center. Google explained the decision in a blog posting, saying: “eBay Live attendees have plenty of activities to keep them busy this week in Boston, and we did not want to detract from that activity. After speaking with officials at eBay, we at Google agreed that it was better for us not to feature this event during the eBay Live conference.”
Durzy, who said eBay was pleased by the cancellation, cast the abrupt advertising freeze as an experiment, albeit far larger in scale than usual. Money that eBay had been spending on Google is being used to advertise elsewhere online, he said, to see if other sites offer better financial returns.
For years, eBay has been Google’s biggest U.S. advertiser, making the shift in its marketing strategy all the more remarkable. Anytime Google users searched for a Beanie Baby, antique chair or Sony PlayStation, an eBay ad would almost inevitably appear near the results.
EBay’s ads showed up on Google 188.3 million times in March, according to comScore Networks, more than double the number run by Target, the No. 2 Google advertiser.
Whether Google will suffer financially because of eBay’s withdrawal is unclear. Nor is it known whether eBay or its merchants will take a revenue hit because of the change in strategy.
Google’s boundless ambitions are generating increasingly aggressive responses from its rivals. For instance, Microsoft Corp. is trying to derail Google’s pending $3.1 billion acquisition of online advertising firm DoubleClick by complaining to the Federal Trade Commission about antitrust concerns.
EBay’s relationship with Google is highly complex. At the same time they are feuding, and competing in online payments and instant messaging, they are cooperating on a multi-pronged deal overseas in which Google is placing its ads on eBay, among other things.
In any case, eBay Live is frequently a stage for drama, and not just with Google. Alibaba, an eBay rival in China, found out the hard way at eBay Live last year in Las Vegas.
It had rented a restaurant in the hotel where eBay Live was holding a party.
An eBay executive who found out tried unsuccessfully to rent the restaurant from under Alibaba, according to an Alibaba executive and a hotel employee present during the animated discussion. The eBay executive eventually forced Alibaba to remove all of its signs.
Brown, the analyst, who spoke by telephone from Boston, where he was attending eBay Live, said that Google’s retreat from hosting a party in Boston doesn’t end its differences with eBay.
“I have a difficult time believing that this resolves the showdown that seems to be coming,” he said.