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Wed, Jan 25, 2006 - Page 12 News List

EBay determined to fend off challenge from rival Google

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EBay Inc Chief executive officer Meg Whitman said the company's expertise in running online auctions will fend off competition from Google Inc.

"We take every competitor very seriously, but we really do have a tremendous position in the marketplace," Whitman said in an interview. "We are the experts at running marketplaces. We've been at this now for 10 years."

EBay, the world's largest online auctioneer, is increasingly competing with Google, which in November debuted a Web site that lets users post information including classified ads and job listings. The threat from rivals including Google, the Internet search engine that is also developing a Web payment service, may force eBay to spend more on marketing and acquisitions to spur growth.

Quarterly profit at eBay has risen as much as 53 percent in the past four quarters excluding fourth-quarter results. In contrast, the company boosted profit by as much as 235 percent in 2002.

Adding online auctions or sales would give Mountain View, California-based Google another way to tap its base of 400 million monthly users for revenue.

Chief executive officer Eric Schmidt said in June that Google is developing an online payment service that analysts said could compete with eBay's PayPal service. PayPal generated US$304.4 million in revenue last quarter, 48 percent more than a year earlier.

"There is no question that they're releasing lots of different products that are going after lots of different spaces," Whitman, 49, said, referring to Google. "We'll see whether they're able to take that position beyond advertising to things like payments."

EBay acquired PayPal in 2002 to accelerate growth of revenue from buyers paying by e-mail.

"There is immense legal and regulatory compliance," Whitman said. "When you're handling people's money, every legal and regulatory agency in every country is very interested in that. That is some of the expertise we've built up over the last five or six years."

First and second-quarter forecasts for revenue and earnings per share from eBay missed analysts' expectations, reflecting what Whitman said was the company's caution in predicting the contribution from acquisitions last year. eBay bought Skype Technologies SA, an Internet telephone provider, and Shopping.com, an online price-comparison Web site.

Whitman said some eBay buyers and sellers will switch to rivals as Internet sites proliferate. eBay is countering by increasing marketing and improving security and services such as Skype's free Internet calling to encourage buying of big-ticket items such as cars.

"The reality is that sellers sell in many different channels. Buyers buy in different channels," Whitman said. "Our job is to make sure we get the most of our buyers' share of wallet and that the sellers prefer eBay. If you look at fourth-quarter results in our largest markets, one would have to say we are providing a remarkable value proposition for both buyers and sellers."

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