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On May 25, 2006, Yahoo! Inc. 1 (Yahoo!),
the world’s largest online media company, announced its
plans to form a strategic alliance with eBay Inc. 2 (eBay),
the world’s largest online auction company.
Under their partnership, Yahoo would exclusively provide
online banners and graphic advertisements at eBay’s site.
In
return, Yahoo! would promote PayPal 3, eBay’s online payment
service, as a preferred payment provider for purchases made
online on the Yahoo! website. PayPal would provide an array
of payment options to Yahoo!’s users navigating the web for
shopping, auctions, and subscription services.
Commenting on the alliance, Chief Executive of Yahoo!, Terry Semel, said,
“The deal offers great opportunities for both companies to share great
assets with each other. It’s all about creating more value and a better
experience for users as well as for advertisers.” 4
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Yahoo! and eBay also planned to form a co-branded toolbar, which could be downloaded onto the user’s
web browser, which in turn would direct the users to eBay’s auction site and Yahoo!’s search engine.
On eBay’s site, the toolbar would provide links to the Yahoo! home page, Yahoo! Mail, and My Yahoo! options on the Yahoo! website.
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[1] Yahoo! was established in March 1995. It ranks second in the online
advertising market, after Google Inc. The company had revenues of US$ 1.56
billion for the first quarter of 2006.
[2] eBay Inc., a leading e-commerce player, has around 200 million online
auction users. The company had revenues of US$ 1.39 billion for the first
quarter of 2006.
[3] As in April 2006, PayPal’s online payment service had 73 million
accountholders in the US.
[4] Elinor Mills and Margaret Kane, “Yahoo-eBay deal a Google buster?” CNET
News.com, May 25, 2006.
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