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EBay-Google rivalry downplayed

Meg Whitman, CEO of eBay, on Monday downplayed speculation that its chief business partner, the popular Google search engine, was poised to become its biggest rival.
/ Source: The Associated Press

Meg Whitman, chief executive of online auctioneer EBay Inc., on Monday downplayed speculation that its chief business partner, the popular Google search engine, was poised to become its biggest rival.

TALK IS RIFE that Google is seeking to diversify its business after it emerged late last month that the five-year-old search engine is considering an initial public offering of shares in a flotation that could value the firm at $25 billion.

Regardless of whether Google taps the public markets, industry observers expect it to use its powerful search technology to make a concerted push into e-commerce. It has launched a trial version of Froogle, a price-comparison search engine for thrifty shoppers.

EBay is one of Google’s biggest advertisers, investing a significant part of its marketing budget on keyword listings that appear on the world’s most recognizable search engine.

“We’re good for Google and Google is good for our sellers,” Whitman told Reuters in an interview on Monday at the close of the American company’s first ever European analyst day.

Earlier, she gave the same message to dozens of technology fund managers and Internet and retail analysts.

The company is pitching its profitable business model to Europeans, hoping to attract sell-side analyst coverage and institutional investors on this side of the Atlantic.

Whitman said she did not see Google as a threat. When asked by a fund manager if she thought the popular search engine would make a push into online auctions, she said: “I don’t think that’s what they’re going to do. I think they will focus on search.”


Google would be one of the few competitive obstacles to eBay’s growth plans. EBay has told analysts it will notch up an operating profit of $986 million in 2004 on sales of $2.9 billion, a 38-percent year-on-year jump in revenue.

Whitman said Google’s sales outside the United States were key to meeting its growth projections. Lately, the company has come under increased scrutiny as analysts say its shares trade at more than 30 times its estimated 2004 earnings before interest, tax, depreciation and amortization (EBITDA).

Whitman singled out the German and British markets as a near-term growth catalyst, and, further on, China.

“In the long run, in quite the long run, I think China could be the largest market for eBay,” said Whitman. “This is a 10, 15, 20-year investment before we will see its true potential.”

Whitman said Germany’s economy remained a concern. “The (German) economy is not in terrific shape. That affects the buying power of German consumers and that, in turn, affects Germany’s eBay customers,” she said.

Germany has become an increasingly important market, generating $92 million of third-quarter sales, up 74 percent year on year, making it the company’s biggest market outside the U.S.

She added that a European provision to include value-added tax on all online transactions from July had an impact on small German vendors. But she said the market had begun to show signs of recovery.

The company plans to announce early next year a roll-out plan for its PayPal online payment service across continental Europe, she added.

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