Google-eBay Rivalry Heats Up - EBay Strikes, Google Blinks

In retaliation, eBay pulled all of its advertising from Google. While eBay refused to admit that it was doing that specifically because Google was throwing that party, Hani Durzy, an eBay spokesman, did say that “We didn’t think it was the way for one partner to treat another.”

And then an amazing thing happened: Google blinked. At the last minute, it canceled the party. The official Google blog entry announcing the reversal said in part that “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.”

Nobody is fooled into thinking that eBay pulled the ads for any reason other than as a reaction to Google’s attempt to put pressure on them with this party (eBay has tried to claim that it’s an “experiment”). Nor is anyone fooled into thinking that Google’s response was due to the search engine suddenly having an attack of good taste. With those fig leaves removed, what can we take home from this?

First of all, we now know that large companies are still capable of acting like middle school students. Here’s a nice article that makes that point. More importantly, despite providing Google with a relatively small fraction of its revenue, eBay is strong enough to make it blink; some of us were beginning to wonder whether that was even possible. If others take that lesson to heart, Google may find itself ducking more blows in the future.

But most importantly, eBay’s move may give others in the game something to think about: there is life beyond Google. If eBay sincerely wants to characterize this move as an “experiment” to see how well its advertising is spent, it is going to have to go through with it. What kind of return will it see by investing the advertising dollars originally earmarked for Google with Yahoo, Microsoft, and Ask? I suspect a lot of people would like to learn the results of that experiment!