What?! Again with Google...?

Well, yes and no.

Yes, this Washington Post article, "Shake-Up, Competition Raise Doubts About EBay" is about how Google/GOOG assumedly will eat eBay's lunch via the just released Google Checkout. But no, not really, because my goal is to show you that Wall Street -- i.e., investors -- are a forward-thinking gaggle of characters.

"A management shake-up at eBay Inc. and a new threat posed by an online payment system from Google Inc. have caused analysts to question the outlook for the world's largest online auction site. The San Jose-based company announced yesterday that Jeff Jordan, a longtime eBay executive and the dynamic heir apparent to current chief executive Meg Whitman, would leave the company to spend more time with his family. Jordan was president of PayPal Inc., the popular payment processing system owned by eBay. At the same time, eBay said it would not accept Google Checkout -- the rival online payment system unveiled last week by Google Inc. -- on its site, angering many buyers and sellers who want alternatives to PayPal and who claim eBay is using its market share to squeeze out competitors..."

The thing of it is is that PayPal owns this market. Google Checkout is merely and only the newest entrant in the field. And for all that, about the size of a gnat on an elephant's butt.

"... the emergence of Checkout signaled turmoil for eBay, which in the first quarter this year got nearly a fourth of its $1.39 billion in revenue from fees collected through PayPal... Google Checkout is limited to holding credit card information so that users can buy items on any participating Web site with a single click, but the company will probably expand its scope, which would encroach more on PayPal's business of serving individual merchants and buyers. Google is also offering the service at a lower rate, which means merchants would flock to it..."

So, really, where is the feared competition? PayPal has the brand name, PayPal invests a lot of money, time, and effort into establishing trust... and yet, investors believe Google Checkout will emerge triumphant in a battle of the two. So eBay/EBAY shares are sold and Google/GOOG shares instead are purchased.

And precisely as I told you, lo these many months ago.
-- David M Gordon / The Deipnosophist