Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu Jan 23 2014 15:26:33

Would Google Eye PayPal if Spun Off from eBay?

By: Ina Steiner

Sponsored Link

Bloomberg got right to the heart of the matter yesterday when its reporter asked Carl Icahn how much a spun-off PayPal might go for. The question came after eBay revealed Icahn was pressuring the company to spin off PayPal into a separate company.

If it eventually came to pass that eBay spun off PayPal (and certainly that's a big if, since eBay's board doesn't go along with the idea), that could leave PayPal and eBay, as separate companies, open to an acquisition by a third party. That could even be the impetus behind the push to spin off PayPal.

It's fun to think about how acquiring PayPal could benefit industry players (leaving aside whether or not such a purchase is within reach of them).

- Google. It already has very close relationships with retailers including on the local level, and its failed Google Checkout PayPal-clone shows it clearly sees the benefit of a payments service. And imagine this: clicking on a PayPal button in a Google advertisement and paying for the product without ever leaving the site you're on?

- Rakuten. This Japanese juggernaut has been acquiring marketplaces worldwide. PayPal could do for Rakuten what it did for eBay Marketplaces. First, merchants using PayPal might be more likely to sell on Rakuten marketplaces, and of course, PayPal would give Rakuten instant access to shoppers around the world, boosting conversion rates for Rakuten marketplaces.

- Alibaba. PayPal is currently locked out of China's domestic market, but with Chinese ownership, that barrier would be eliminated. That would present a huge growth opportunity for PayPal.

- A large financial institution (CyberSource, Wells Fargo, etc.). PayPal is poking sleeping giants with its point-of-sale and mobile payments solutions. This scenario presents the most danger to PayPal's traditional offering that might not be left intact.

- Amazon. It's hard to envision Amazon acquiring PayPal, so this is classified under "unlikely."

If eBay did spin off PayPal, it could still offer PayPal on its marketplace, but it could also move toward offering its own checkout system a la Etsy Direct Checkout. So who might be interested in acquiring the rest of eBay if it spun off PayPal? Yahoo might be somewhat interested in operating eBay.com. (Remember, it still has an auctions business in Japan and operates Merchant Services, which includes Yahoo Stores.) What about Microsoft or IBM? And what changes might they make to the Marketplaces business?

By the way, just the talk of eBay spinning off PayPal could be spooking large brands and merchants eBay is wooing (and currently servicing) through eBay Enterprises.

eBay CEO John Donahoe is certainly not doing any salesmanship to attract potential buyers to its marketplace assets. We're undervalued, he said of the company during eBay's post-earnings conference call with Wall Street analysts. And, he said: "I've said this before, I'll say it again, there are no silver bullets in our Marketplace business. If anything, it has been proven over the last five or six years is no single platform initiative or product thing in and of itself created viral improvements."

Note that he didn't allow for the possibility that his strategy of moving away from auctions might have been a failure, as the company is still sticking to its premise that his 3-year turnaround was a success.

Feel free to put forth your own eBay or PayPal mashups - and what would you like to see if the companies were separated?




Comments (19) | Leave Comment | Permalink

Readers Comments

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: Puck

Thu Jan 23 17:15:11 2014

I feel certain if Google is not interested in PayPal the mob would jump all over it.

A perfect acquisition for horizontal integration.

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

by: 1beck3 This user has validated their user name.

Thu Jan 23 18:27:40 2014

Why not someone like Visa, American Express or Chase?

Seems like it would be a good fit, they could probably get PayPal into more physical retail locations and they would love to have access to all those PayPal users (potential new credit card holders).

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: Basset

Thu Jan 23 19:13:08 2014

Yahoo should definitely look into eBay if it goes on the market.

YahBay-B! has a nice ring to it for rename potential.

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: iheartjacksparrow

Thu Jan 23 20:51:53 2014

If Yahoo acquired PayPal, could that lead to Yahoo resuscitating its auction site and being a real contender against eBay?

If Google acquired PayPal, would they start an eBay alternative site, as many people have been asking for for years?

I'm not that familiar with Rakuten and Alibaba so I don't know how that would impact their business.

As far as 1beck3's idea, don't Visa and Mastercard have, or will have, their own PayPal clone?

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

by: NetWatch This user has validated their user name.

Fri Jan 24 00:45:09 2014

One has to wonder why Carl Icahn is trying to do what he's trying to do. It goes way beyond just another attempt to make some fast money. Icahn knows something, and raising this whole notion of splitting PayPal off from ebay (whether or not it ever occurs) starts a lot of people asking a lot of questions and looking into a lot of things. Way to go, Carl!

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: Philip Cohen
Web Site

Fri Jan 24 14:35:24 2014

A credit card merchant account with their own licensed, prudentially regulated, FDIC-insured, financial institution (ie, a real bank) and the integration of MasterCard’s “MasterPass” or Visa’s “V.me” interface is all any online merchant needs to implement simple, safe and reliable online payments, just like B&M merchants have always had with POS credit card transactions …

Notwithstanding its ten year head start, eBay’s “PreyPal” is still a clunky middleman whose insurmountable problem is that has no dynamic linking to the retail banks (as do MasterCard and Visa) and in the main rides on the back of the retail banks’ existing payments systems (as do all the other payments pretenders, Amazon, Apple, et al).

Why would MasterCard or Visa NOT want to acquire the clunky “PreyPal”? Because notwithstanding the amount of “noise” that emanates from the eBay Dept of Spin, “PreyPal” has only about one percent (~1%) of the world’s total payments business; MasterCard and Visa have ~90% thereof between them and Amex has another ~8%, and MasterCard and Visa have now launched their own online/POS digital wallets …

Now that “MasterPass” and “V.me” are available, outside of its effectively mandated place on the eBay marketplace, the clunky “PreyPal” is effectively redundant. The only thing that “PreyPal” offers is ease of payment on the eBay marketplace due to its close integration therewith, and the fact that “PreyPal” will give a merchant account to just about anyone or their dog, which the banks, sensibly, will not do …

eBay will never let “PreyPal” go; as great a fool as Johnny Ho is, he does at least understand that without eBay, “PreyPal” would be effectively crippled, and without “PreyPal”, the eBay marketplace would still continue on its journey down the toilet—but at an even faster rate …

Regardless, they are both destined to continue their journeys to the sewage farm …

eBay / PayPal / Donahoe: Dead Men Walking ... http://bit.ly/UVXx53

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: Ed Gadfly

Fri Jan 24 14:41:11 2014

So if PayPal is seperate from eBay, people are going to forget the money holds, phishing attempts and other problems to embrace "the World's Most Loved Payment System?"

They both wronged a lot of people.

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

by: Orwellwasright This user has validated their user name.

Fri Jan 24 19:16:35 2014

PAYPALS insane profitability is due to EBay’s addiction to fraudulent heavy handed policies, which would be unworkable outside eBay’s closed system
EBay FORCES sellers to use paypal, while silmoutainouisly prosletizing the most insanely one sided dispute process in all of retail

ONLY on eBay using paypal, can a buyer claim they received an empty box and get a full unquestioned refund
Only on eBay can a buyer claim they received a broken ipad, send back a piece of paper and get a full refund
Only on eBay can a merchant processer who represents the buyer decide a dispute
Only on eBay can paypal HIDE the details of buyer’s payment processer, leave the seller out of the dispute and decide to refund the buyer

The reason paypal is so profitable is simple

1) Grossly inflated charges for transactions where they simply transfer a payment from a buyers account into the sellers account which is essentialy a NO risk transaction
2) Flipping ALL risk onto the seller, and forcing a seller to prove a buyers claim false, using impossible standards , and giving every benefit of every doubt to the buyer , to the point where a one time buyer with a one day old account is given preference over a decade long seller with 1000’s of transactions, a direct contradiction to the way REPUTABLE processors do business
3) HAVING eBay FORCE sellers to use this predatory and unnecessary abomination

Any buyer would have to have eBay’s guarantee that all 3 practices would continue or paypal becomes a useless toothless rotten empty shell .

Hopefully any buyer is aware or this

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

by: Patricia This user has validated their user name.

Fri Jan 24 23:45:58 2014

I can't imagine Ebay spinning or selling off Paypal...its way too useful to Ebay.

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: Ming the Merciless

Sat Jan 25 00:37:43 2014

Years ago I owned a few shares of ebay stock at a time when The Ho succeeded in reducing my GMV by 75% in a two week span which I've never fully recovered from.

If any of you own stock or have influence over anyone who does, write The Ho and tell him you're giving Carl Icahn your proxy for your large portfolio of ebay stock whether you actually do or not.

You need not specify to The Ho how many shares you own, but Icahn's battle will won or lost in a proxy war before the next shareholders meeting.

Be sure to tell the The Ho you're supporting Icahn because of his incredibly amoral, avaricious, and vicious small seller extermination campaigns.

Ebay shareholders can scare the hell out of this arrogant jerk.

Do it!

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: ebayisajoke
Web Site

Sat Jan 25 01:18:35 2014

PAYPALS insane profitability is due to EBay’s addiction to fraudulent heavy handed policies, which would be unworkable outside eBay’s closed system
EBay FORCES sellers to use paypal, while silmoutainouisly prosletizing the most insanely one sided dispute process in all of retail

ONLY on eBay using paypal, can a buyer claim they received an empty box and get a full unquestioned refund
Only on eBay can a buyer claim they received a broken ipad, send back a piece of paper and get a full refund
Only on eBay can a merchant processer who represents the buyer decide a dispute
Only on eBay can paypal HIDE the details of buyer’s payment processer, leave the seller out of the dispute and decide to refund the buyer

The reason paypal is so profitable is simple

1) Grossly inflated charges for transactions where they simply transfer a payment from a buyers account into the sellers account which is essentialy a NO risk transaction
2) Flipping ALL risk onto the seller, and forcing a seller to prove a buyers claim false, using impossible standards , and giving every benefit of every doubt to the buyer , to the point where a one time buyer with a one day old account is given preference over a decade long seller with 1000’s of transactions, a direct contradiction to the way REPUTABLE processors do business
3) HAVING eBay FORCE sellers to use this predatory and unnecessary abomination

I SECOND THAT!!!!

PAYPAL = FRAUD
EBAY = FRAUD

The only reason eBay would sell off PreyPal (PayPal) is if they knew they were all going to jail for fraud. HAHAHAHAHAH Seems many of them right now are jumping ship.  

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: Puck

Sat Jan 25 10:43:57 2014

eBain's only method of strong arm enforcement of their arbitrary policies is The Pal.

They can't get rid of their in-house goon squad as there's no other vehicle around that can replace their, "We'll take your monies at will" muscle.

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

by: FREDDY This user has validated their user name.

Sun Jan 26 10:24:51 2014

I really doubt that Google would have any real interest in Paypal.
If anyone, I think the Chinese would go after it..
This tidbit from Icahn may be just a way to pump up some stock to dump???

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

by: Will This user has validated their user name.

Mon Jan 27 00:24:13 2014

Absolutely - all of this Icahn talk is nothing more than a pump.

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: Philip Cohen
Web Site

Mon Jan 27 02:54:00 2014

Well, the injection of hot air cooled off pretty quickly; indeed, by the following morning ... LOL

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: Ming the Merciless

Mon Jan 27 18:56:58 2014

Just thinking about Carl Icahn successfully doing a hostile takeover of ebay is delicious.

He'd soon discover all The Ho's voodoo bookkeeping, and the Bainification of The Ho and The Sociopaths would begin.

What goes around might just be coming around.

Ho: be afraid, be very afraid.

There are thousands of sellers you wronged communicating with Icahn.

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: bitbybit

Mon Jan 27 23:48:37 2014

"Well, the injection of hot air cooled off pretty quickly; indeed, by the following morning"

I sure hope it is just the calm before the storm.

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

by: Digmen1 This user has validated their user name.
Web Site

Tue Jan 28 14:06:06 2014

There is no way ebay would sell Paypal, it makes too much money for them and its tightly integrated into their business model.

Perminate Link for Would Google Eye PayPal if Spun Off from eBay?   Would Google Eye PayPal if Spun Off from eBay?

This user has validated their user name. by: Ming the Merciless

Tue Jan 28 15:48:23 2014

If Google bought PayPal, would PayPal suddenly become an "unsafe" payment method as ebay declared Google payments was when they wouldn't allow it?

That would be rich indeed.

However, it likely won't happen if   for no other reason that non Ho paid accountants would soon see all the creative bookkeeping that's been going on in the three period between 2007 and 2014.



Login is required to post comments.
To sign in to leave a comment using your AB Verify User Name, fill in the form below. If you have not yet signed up for AB Verify, or if you'd like more information, go to the Registration Page
.

Login for AB Verify
Be sure and use your email address and password to log in.

 
Email:
Password:
 
 Forgot Your Password?
 Even though you are signed in with the AuctionBytes Blog, you will have to sign in to the EcommerceBytes blog. But you can sign in with your existing AB Verify info.