was unlikely to enter into e-commerce and was not a potential rival to eBay That sanguine conclusion started to unravel in 2005 Google began recruiting eBay engineers In October, Google started testing Google Base, a free classified advertising service that threatened eBay’s auction service Executives at eBay took the threat seriously In private meetings, they divided into two teams A green team represented eBay’s interests; a red team tried to emulate Google’s strategy The red team concluded that Google represented a serious threat, and eBay executives began exploratory talks with Microsoft and Yahoo to see if some collaborative effort could ward off the Google threat eBay spokesman Chris Donlay describes the firm’s dilemma of dealing with a firm that has been a valuable ally but at the same time could be a competitive threat “Given how really fast the Internet changes, it comes as no surprise that the line between competition and cooperation is sometimes blurry.” By the late spring of 2006, eBay’s management was still in a quandary about what to about Google Some executives, fearful of losing the advantages of continuing to work with Google, want to maintain eBay’s ties to the firm Others worried that continuing a close relationship with Google was akin to putting the fox in the proverbial henhouse They want to move quickly to establish a relationship with Yahoo or with Microsoft that would compete with Google [2] The tension between eBay and Google hardly suggests the aloof world of perfect competition where consumers are indifferent about which firm has produced a particular product, where each firm knows it can sell all it Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 567