What Does Google Have in its Wallet?
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Is Google getting into the online payment business? That was the rumor in late June, when rumors abounded about a planned new service that would potentially pit the search engine giant head-to-head with PayPal. While Google's CEO denied that the service would be competing in the same field, it's worth analyzing where Google might be going, and what challenges it faces.
In late June, the Wall Street Journal featured an article that set off a major buzz among industry analysts, search engine optimizers, online merchants, and others. In the article, the WSJ reported that Google planned to launch an electronic payment service, entering an arena that PayPal has all but owned for years. The service, supposedly code-named Google Wallet, could offer the search engine giant a huge opportunity to diversify its revenue stream.
The WSJ article pointed to hints that Google Wallet has been in the works for some time. It said that Google’s website states it “will eventually allow consumers to pay to view videos online.” In fact, John Battelle’s Searchblog claims to have confirmed that Google will do a beta launch of an in-browser video playback feature based on the open source VLC media player. A more tantalizing hint came from an online California state business database, which revealed that Google filed on April 13 to incorporate an entity called Google Payment Corp. Coincidence, or conspiracy? Well, most press hounds love a conspiracy after all.
For several days, Google Wallet was hardly more than a rumor, but the stock market has been known to act upon less. The Monday after the story broke, Google saw its stock rise more than two percent, or $6.40, to close at $286.70 on the Nasdaq. Meanwhile, the potential service’s strongest potential competitor saw its stock drop by a similar percentage. eBay, the online auction giant who owns electronic payment service PayPal, finished at $37.24 per share the same day, down by something under a dollar.
Google CEO Eric Schmidt finally made a statement the following day, in an apparent attempt to stop, or at least slow down, all the speculation. During an interview with the Associated Press, he explicitly said, “We do not intend to offer a person-to-person, stored-value payments system.” This description certainly fits PayPal. Rather than stop everyone from wondering what Google was up to, however, Schmidt’s statement seemed to add fuel to the fire. If the search engine giant does not intend for Google Wallet to compete with PayPal, what are Google’s plans for the service?
Next: Google’s Possible Intentions >>
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