Why eBay wants Stumbleupon

Updated: TechCrunch just reported that StumbleUpon is in talks to being acquired with AOL, Google and eBay as possible suitors. Though we have not been able to chat with folks from StumbleUpon, the social bookmarking discovery service, we have heard that eBay is the likely winner of the derby. I have not been able to confirm if they initialed the documents.If true, then this is the second time Google and eBay have tussled over a start-up – the last one being Skype. TechCrunch says the price is in the $40-to-$75 million range, though we heard it is closer to the $40-$45 million. Again, it is not confirmed, and so treat the price tag as a rumor. StumbleUpon has raised close to $1.5 million in seed financing.

Its recent expansion into Video has helped boost the company’s traffic numbers in recent months. It has a unique business model: it embeds sponsor-sites in some of its search results, which provides better returns for advertisers since it lands on a sponsors page instead of users having to click on an ad – be it a banner or a link

In case you were wondering why, here are my reasons:

Look at this from the toolbar-and-Skype lens. StumbleUpon makes a toolbar that provides collaborative serendipity to find web sites. The toolbar, if you ask StumbleUpon users provides more useful and productive results, than say Google.

By marrying the toolbar to Skype client, eBay can do an end run around Google’s dominance of the search business. A simple search box inside Skype client is all it would take. It is not that far fetched: Skype has been slowly integrating various different services (including PayPal) into its client, and slowly becoming eBay’s desktop backdoor.

Now this is just a hypothesis, and I would love to hear what you folks have to say about the logic behind this deal.

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