Stocks: (EBAY)(GOOG)
According to The New York Times, Google’s Checkout online payment system is offering customers some pretty big incentives to switch from Ebay PayPal. Google is paying for customer promotions and will not charge merchant fees until the end of 2007.
That sounds like anti-competitive behavior, but that will have to be left to legal experts.
The money that merchants save my go into marketing on Google’s text ad platform. In other words, they figure to get some cash one way or the other. It is an interesting strategy to use Checkout as a method for building Google ad customers.
Even if Google is willing to lose money on Checkout to get market share, PayPal has an enormous lead. The Ebay service has 123 million customers worldwide and in the last quarter processed $9.1 billion in transactions, up 37% from the same quarter a year earlier.
Checkout may help Google get merchants to use its text ad platform, but it won’t be catching PayPal. Ebay’s lead in that market is just too large.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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