eBay-Yahoo Deal: Less Than Meets the Eye?

Rob Hof

It's no merger, as at least one overeager analyst had suggested, but this morning eBay and Yahoo announced a fairly wide-ranging deal to work with each other. Looks like a good deal for both, though no one piece of the deal looks like an immediate blockbuster, especially since no fruits of the deal will come until at least next year.

In fact, it seems like the specifics of the deal, such as they appear so far, do relatively little for now to counter the growing power of Google, which most people assume is the impetus for the deal. eBay's PayPal becomes Yahoo's preferred payment option, and that's certain to be a nice boost for Yahoo. But I'm not sure it really changes the game vs. Google Payments, which is still nascent. Likewise, I wonder how significant the deal for Yahoo to feed ads to eBay. It seems unlikely eBay will suddenly blanket its main site with ads, which could distract from the auctions.

CEO Meg Whitman also referred to finding ways for eBay auction listings to appear more prominently in Yahoo searches. No doubt that could help drive more potential buyers to eBay, though that will become useful vs. Google only if Yahoo finally improves its search enough to win people back from Google.

I'm sure I'm missing some implications this early in the morning.
So it's quite possible there's more to come--though I still doubt an inevitably messy merger is in the cards. The other possibility is that eBay and Yahoo aren't simply reacting to Google but doing a deal that makes sense for their own customers. That's always a smarter reason for any deal, and I wouldn't be surprised if that's the bigger impetus than Google's still-amorphous competitive services.

Update: Scot Wingo of the e-commerce services firm ChannelAdvisor thinks this is something of a trial balloon to see how eBay sellers, stockholders, and others view the basic linkup (very positively, apparently). He notes that there's nothing about eBay buying more search ads on Yahoo, nothing outside the U.S., nothing about China, where they're fierce rivals. "It's the first part of a multi-part courting relationship," he says. He also has a lot of commentary on the deal, including notes from Meg Whitman speaking at a Goldman Sachs conference this morning, here.