Google plans to nuke Paypal | HT Tech

Google plans to nuke Paypal

Is Google trying to do a Microsoft to smaller entities? Probably next few days will have the answer, writes Puneet Mehrotra.

| Updated on: Jun 20 2005, 17:30 IST

Corporate communication and blogs combined with technology blasted in the new media aka www and the impact could be lethal. Vested information enthroned on the blog squalled on the www and eureka the message would be delivered.  What a terrific idea, resulting revenues and an informative column. Alas! not all dreams are meant to come true and the same happened with my column on blogs and corporate communication. A week's research nuked by Google. If on a Sunday afternoon you read a headline like "Google Takes on Paypal" you can't help but put everything down.



The Importance of being Paypal


If you an online entrepreneur Paypal is your probably your best online pal. PayPal is one of the most popular methods of paying on the Internet without using the credit card. In fact, no cash transaction is generally involved as users can just transfer money using their e-mail ids. 


In 2002, San Jose-based bought PayPal for $US1.3 billion. Presently Paypal accounts for a substantial portion of eBay's profits. During the 1st quarter Paypal  accounted for $233.1 million  or 23 per cent, of eBay's revenue.



The Google Move


Google versus Yahoo, corporate rivalry is understandable. Google versus MSN, Microsoft the bully and its hunger for rival companies, again comprehensible. But Google versus eBay (Paypal is an eBay company), not comprehendible. Consider this, Google relies mainly on advertising for its revenues and eBay one of its biggest advertisers.  So why is Google so hell bent upon crippling one of its biggest customers?


War time equations


What Google is probably doing is following the ancient war maxim of minimum casualties. The reason for its move probably lies in the Google versus Yahoo versus Microsoft war and Google has good reasons to look into this market considering a bulk of their revenues come from the online advertisement market which is expected to get complicated with the entry of Yahoo! and possibly Microsoft services later this year.  The cost of this probably maybe killing one of its biggest customers, eBay. The payoff will be survival. Google seems to be making the former choice.


For Google, a payment service could represent a significant expansion beyond online advertising, which generated 99 per cent of its $3.2 billion in revenue last year.


The Credibility Factor


An important aspect to consider currently is that Google taking on eBay is only a piece of news as of now.  Nothing is confirmed from Google and no spokesperson from Google has said anything so far. The source of this news is The Wall Street Journal which reported Google's plans on its Web site late Sunday, citing sources familiar with the Mountain View-based company's plans. The Journal did not provide any details about Google's strategy. But worth mentioning is that in the recent breaking news  Wall Street Journal also takes the credit for reporting the Apple's switch to Intel Processors for the first time on the Internet. Wall Street Journal cited sources familiar to Google Inc. and are said to be quite trustworthy.


Could this news have been leaked to 'credible sources' in WSJ?
Is this part of some corporate communication plan of Google to scare Paypal and submit itself to Google?
Is Google trying to do a Microsoft to smaller entities?


Unanswered questions. Probably next few days will have answers to some of them.


The End Benefits


It seems likely that Google would want to create streams of revenue in addition to their advertising systems as everyone knows not to put all their eggs in one basket. Paypal don't really have any international competition for their services so having Google compete with them will be good for both webmasters and users alike. Paypal has a huge head start. But worth remembering is, so did Remember what did to the world of email?



Puneet Mehrotra is a web strategist at and edits you can email him on

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First Published Date: 20 Jun, 15:57 IST