Skype, Ebay and Google

February 7, 2007

Skype asked me yesterday to upgrade last night to the final 3.0 (I use Skype for video conferencing because of its ability to go through firewalls by tunneling on port 80). So having run the beta for over 3 months now, I thought it would be a good idea. During the install I was prompted to whether I wanted the Google toolbar installed, at which point I stopped the install and uninstalled Skype (I hate when install programs creep with toolbars, and all other sort of rubbish plugins that I did not ask for).

But what is Ebay's strategy by shipping a competitor's product? Google merchant was born to compete directly with Paypal, which I am sure Ebay's executives did not receive too well. However, not far later in summer Ebay signed a large multi-year advertisement deal with Google. Buried in that press release, an announcement that Google Talk creeps into Skype. And now Skype ships with Google Toolbar.

Google has definitely won a lot: extend its messenger network, sell advertising, and get the toolbar distributed. But Ebay?

Well, Ebay's strategy is probably to focus on their core auction business, and use the other products as channels to bring in further revenue to the auctions (they see Skype as a tool to increase their market share in the auction business). Skype direct revenue from SkypeOut and SkypeIn is peanuts in comparison with Ebay's auction business. And in that context, any sort of interoperability, which would include Google Talk, is welcome.

All great as a concept, but why pick Google?

Ebay would have been better picking an advertising channel from a non competitor, such as Yahoo! With Yahoo! they would have obtained the advertisement network, the toolbar, the Yahoo! IM (a true IM player, unlike Skype). All I know is that I won't be buying any EBAY stock any time soon.

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