In an anticipated deal, Yahoo and eBay said they are aligning in a number of potentially significant commercial and technical areas, including VoIP, payments, advertising and browser plug-ins.
The move was broadly interpreted as a shot across Google’s bow. Both companies have reason to fear the search-advertising leader.
Google has made billions through a combination of keyword advertising and superior search technology, despite the fact that Yahoo owns the companies that invented both categories – Overture in text ads, Inktomi and AltaVista in search.
eBay and Google do not directly compete, but indications are that the more add-on services Google launches – such as payments systems and classified ads – the more it could start cutting into eBay’s revenue.
Under the deal, Yahoo has been named the exclusive third-party provider of all graphical advertisements throughout the eBay.com site. It will also provide sponsored search results on eBay’s US site.
The two firms will also look at ways they could increase the quality and comprehensiveness of eBay listings on Yahoo’s web search service. This will likely focus on getting more timely listings into its index.
In exchange, eBay-owned PayPal will become the exclusive third-party provider of its online wallet, meaning users can use PayPal to pay for Yahoo services. It will also be plugged to Yahoo advertisers and publisher partners.
Thirdly, the companies will figure out ways to incorporate services from Skype, the VoIP company eBay recently paid over-the-odds for, into advertisements, in the form of click-to-call links.
Finally, eBay has committed to include Yahoo web search and other Yahoo links in its browser toolbar, which will be co-branded. About four million people have downloaded the eBay toolbar to date.
While the deal is undoubtedly strategically significant, the companies are putting no dollar value on it yet, other than to say it will not be material to either firm’s 2006 finances.
Elsewhere in Silicon Valley yesterday, Google admitted that it has struck a deal to put its software bundle on Dell’s PCs. Financial terms were not disclosed.
For Google, which recently complained about Microsoft’s plan to make MSN Search the default search in Internet Explorer 7, it’s a clear attempt to head off Redmond’s advances into the search advertising space.
Google’s desktop search will be included on Dell’s computers, and the browser will be configured with a jointly branded home page.
