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eBay-PayPal Split Not Designed for Sale to Alibaba

eBay announced early Tuesday morning it would split eBay and PayPal into two separate businesses that would both be publicly traded. In a Q&A session with Wall Street analysts, eBay CEO John Donahoe was asked whether eBay had or would consider selling eBay and/or PayPal to a large company.

While not citing it by name, the analyst’s mention of a “newly, very large company that has the capital to be able to acquire both of those businesses” was clearly a reference to Alibaba, the Chinese ecommerce company that just went public on the New York Stock Exchange.

“To be perfectly clear, this move is not designed to position either business for sale,” Donahoe said.

The fact analysts are considering the sale of eBay and/or PayPal as a possibility speaks volumes about the state of eBay’s business.

eBay sellers are buzzing about the fact that John Donahoe will leave after the split. Who will head eBay Marketplaces and eBay Enterprise? Devin Wenig, who is currently president of eBay Marketplaces, will become CEO of new eBay company following separation. And Dan Schulman is joining the company as the new President of PayPal, effective immediately. He will become CEO of PayPal after the split.

It was controversial when eBay acquired PayPal in 2002 under then-CEO Meg Whitman. eBay competitors were using PayPal, and they and new entrants were forced to accept the payments service of its rival. Though never discussed openly, this gave eBay insight into its competitor’s most intimate information about users and transactions. So dominant was PayPal in ecommerce that even Etsy felt compelled to allow its sellers to offer PayPal.

eBay executives alluded to the challenge that PayPal faced in being owned by eBay as one of the reasons the split now makes sense.

Will today’s announcement, which comes on the last day of eBay’s fiscal third quarter, have any impact on shoppers? Neither analysts nor eBay addressed the issue. But eBay’s large-scale security breach revealed in May, followed by stories of outages and other vulnerabilities, may already have shoppers on edge.

Greater uncertainty about what today’s news is all about may be further worrying to eBay buyers.

How does eBay founder Pierre Omidyar, who is Chairman of the eBay Inc. board, feel about today’s announcement?

“Pierre would never allow us to do anything other than what is the right thing in the short, medium and long term,” Donahoe said. “And that’s that.”

See today’s blog posts for more information about today’s eBay announcement:

eBay and PayPal to Split, John Donahoe Will Remain on Boards – EcommerceBytes Blog

How Will John Donahoe’s Tenure at eBay Be Remembered? – AuctionBytes Blog

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.