Yahoo! and eBay's Strategic Alliance
Analysts opined that Yahoo! and eBay had joined forces to consolidate their respective positions in the Internet industry. Rick Aristotle Munarriz, senior analyst at Motley Fool, said, “This is a great move for both of them. These are two companies that were great and their performance on the market in the past few years has been a little disappointing so it’s their way of saying ‘Hey, we can matter again." 7The deal also highlighted the intense competitive environment in the Internet industry. Experts opined that the alliance would help Yahoo! counter the market threat from Google Inc. (Google). Google had emerged as the biggest competitor to Yahoo!, especially in the growing search based advertising market. Google was the most popular search engine and held a 43.1% share in the online search market in the US when compared to Yahoo!’s market share of 28% in April 2006. Google was also rumored to be making effort to build its own merchant service that could rival eBay.
Andy Beal, CEO of Fortune Interactive, a search marketing consulting firm, said, “While I don’t think you can point your finger to one specific product offered by Google that is causing fear to Yahoo! and eBay, the combination of all Google’s recent initiatives is causing both Yahoo! and eBay to reach out to each other for support.” 8
However some analysts termed the deal as “being too late”. Allen Weiner, a Gartner Inc. analyst, said, “There’s no question that this is a significant partnership, but it seems reactive. It’s anti-climactic, because we’ve been waiting for years. If they had done this two or three years ago, they would have done it from a position of strength.” 9
ADDITIONAL READINGS AND REFERNCES
1. “Yahoo-EBay Deal,” www.chron.com, May 25, 2006.2. Michael Liedtke Ap, “Yahoo, eBay Join in Partnership to Challenge Google,” www.abcnews.com, May 25, 2006.
3. Ritsuko Ando, “Yahoo, eBay pact seen a step to global partnership,” www.today.reuters.com, May 25, 2006.
4. “Yahoo, eBay Ally on Ads,” www.redherring.com, May 25, 2006.
5. Ben Charny, “What the eBay-Yahoo Deal Means to Google,” www.oraclewatch.eweek.com, May 26, 2006.
6. Natali T. Del Conte, “Yahoo, eBay Strike Multi-Year Ad, Transactions Deal,” www.pcmag.com, May 25, 2006.
7. “Google sees closer ties to eBay despite Yahoo deal,” www.news.moneycontrol.com, May 26, 2005.
[7] Natali T. Del Conte, “Yahoo, eBay Strike Multi-Year Ad, Transactions Deal,” www.pcmag.com, May 25, 2006.
[8] David Miller, “Is ‘Ya-bay’ Gunning for Google?” www.internetnews.com, May 26, 2006.
[9] “Yahoo-eBay tie-up smart but ‘anti-climactic’,” www.tmcnet.com, May 26, 2006.
