Chapter 11 The World of Imperfect Competition Start Up: eBay Needs Google, Google Needs eBay, and Neither Trusts the Other The Internet auction site eBay has had a close and cooperative relationship with Google, the giant search engine eBay has relied heavily on Google to advertise its products Google relies heavily on the advertising revenue it gets from eBay The greater the success of eBay, the greater the revenue Google will have from eBay’s advertising The greater the success of Google as a search engine, the greater will be the impact of eBay’s advertising To paraphrase Rick’s line from Casablanca, “This could be a beautiful relationship.” It is not The two Internet giants simply not get along Consider what happened in 2007 A Google spokesman said the firm was hosting a “Freedom Party” to announce the inauguration of a new payments service that would compete directly with PayPal, the online payment service owned by eBay eBay was quick to retaliate It pulled all of its advertising from Google later on the same day Google made its announcement Two days later, Google backed down It canceled its party and the payment service the party was to kick off [1] In 2003, eBay had commissioned an analysis of whether Google represented a threat to its operations The study concluded that Google Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 566