30 Comments

Summary:

eBay is very very worried about Google and is trying to work with either Yahoo or MSN (or both) to try and blunt Google, reports The Wall Street Journal. It is a big article about the age old saying: enemy of my enemy is a friend. […]

eBay is very very worried about Google and is trying to work with either Yahoo or MSN (or both) to try and blunt Google, reports The Wall Street Journal. It is a big article about the age old saying: enemy of my enemy is a friend. The really juicy bit is about the consulting giant McKinsey & Co’s conclusions about Google.

Few at eBay initially saw reason to fear Google, say people at the company, in part because of a 2003 study it commissioned from McKinsey & Co. McKinsey concluded that Google wouldn’t use its search capabilities to break into e-commerce. That made Google a manageable threat, say people familiar with the study. EBay’s dependence on Google increased as it shifted ad dollars to online ads from traditional media throughout 2004.

I think McKinsey reports should come with a statutory warning. Why? These are the same people who told AT&T back in the day, that mobile phones will be a niche market. And if that was not enough, I have two words for you: Jeffrey Skilling. (Of course, there is The Witch Doctors a fascinating book if there is about McKinsey blunders.)

So what are your thoughts on eBay & New Friends versus Google. It could be part of a big strategic report ;-)

  1. eBay/PayPal has been using its monopoly position to jack up its fees with seeming impunity. I for one can’t wait for Google to give them some competition.

    Share
  2. Malcolm Gladwell addresses the McKinsey myth in his (as usual) excellent piece “The Talent Myth”:

    http://www.gladwell.com/2002/20020722atalent.htm

    as far as eBay & new friends versus google, if ebay and amazon stopped could simply stop buying traffic from google, google’s revenues would shrink by, what, 50%?

    read ebay’s and amazon’s public filings and you’ll how much they spend on marketing — billions and billions and billions. and where do they spend it? not on 30 second TV spots, that we know. not on major print campaigns, that we know (except for amazon’s occasional sunday paper couponing). no, they spend thos untold billions on the web. and where on the web? duh. on google. they obviously get great value from google, but heck, if you’re worried about google killing you, you should probably consider ceasing your own funding of their arming for war against you?

    Share
  3. not sure why the gladwell link got munged but here it is hopefully clean:

    http://www.gladwell.com/2002/20020722atalent.htm

    Share
  4. something about this blog client wont take underscores in the URL. go to gladwell.com and search for The Talent Myth and enjoy — fantastic reading

    Share
  5. steve

    thanks for the link. the best option is to post the link link . the comment system doesn’t allow long urls because in the past we have had the system abused quite badly by spammers. hopefully this explains it.

    Share
  6. fazal,

    i think you are spot on. the problem ebay has is that it has hit a natural wall in terms of traffic and customer growth. they hate to admit it.

    i think in the end, what they are scared of is customers asking – what have you done for me lately. raise prices – well that’s telco thinking. in the end you are going to have defections.

    the big point is that eBay is a 10,000 plus company. secretly most ebay employees think its too bureaucratic. alliances, meetings, ganging up on google – that’s called not outwitting the competitor in the market place.

    Share
  7. I think McKinsey blunders goes in line with how people misuse management consultants. Often times, because of political issues within the companies, they end up being a tool to forward the agenda of a particular faction rather than truly being able to provide objective recommendations.

    They are only as good as the people who engage them.

    Share
  8. I think ebay was not really doing enough to service its customers better. Google will surely turn Base into such a huge ecommerce play. ebay has lil’ defence against the Google phenom.

    They started testing Base in the natural search reasults too. This could be the beginning of an epic battle between the two Internet giants. Once they’re done enough testing with Google Accounts and a possibility of GBuy introduction. The sheer simplicity of the UI at Google for this play is mind blowing. ebay will have to buckle up soon and take Google head on. Else, it might be too late to catch up.

    Share
  9. When I think of McKinsey, I think of the talent that left. Tom Peters, Louis Gerstner, and Harvey Golub.

    As Tom likes to say, you get bigger by being better:)

    Google works best for most of us. Hard to see that changing anytime soon.

    Share
  10. McKinsey blunders are also painted that way by the management to take the blame off of them. One of the prime examples of a McKinsey blunder – the Snapple debacle – was management’s fault. It was not painted that way though.

    It’s also stupid to highlight mistakes without successes. Of course Om has never made any wrong predictions. What happened Om? Did they snub you in the interviews?

    Share

Comments have been disabled for this post