Yahoo hearts PayPal

Post ImageIn a deal announced earlier today, Yahoo and eBay are teaming up around advertising, e-commerce, and search. Yahoo becomes the exclusive provider of graphical ads on eBay, and will also provide some text ads. They are going to make a co-branded toolbar, and they’ll work to make their respective VoIP apps work together (Yahoo Messenger and Skype). The biggest thing of all though, at least as far as I am concerned, is Yahoo’s adoption of PayPal:

Yahoo will make eBay’s PayPal service the exclusive third-party provider of its online wallet, allowing customers to pay for Yahoo services from bank accounts, credit cards or balances associated with their PayPal accounts. PayPal will also be integrated into product offerings for Yahoo merchants and publishers, including the Yahoo Publisher Network, Yahoo Search Marketing and Yahoo Merchant Solutions.

Yahoo using PayPal essentially removes any doubt that PayPal is the de facto payment service on the Internet. It will be very hard for Google to successfully introduce a competitor now. Two of the largest sites on the net in Yahoo and eBay, plus the millions of other smaller e-commerce sites all using PayPal is an enormous hurdle for any rival payment service. PayPal is the closest thing we have to a truly digital wallet. Incredibly smart move by Yahoo, and excellent outcome for eBay.

Read: CNET News.com

Tamiflu Frenzy

Post ImageIf you turn on the TV to CNN or another news station, you’ll no doubt see something on Wilma and something on Tamiflu. All of a sudden there seems to be widespread fear of an outbreak of avian flu, and as a result demand for Roche’s Tamiflu has skyrocketed. eBay was even forced to take down sales of the drug:

A spokeswoman for eBay said the auction, for Roche Holding’s flu medicine, had been stopped because the sale of prescription drugs was not allowed under the e-commerce company’s rules.

Europe has seen a surge in demand for Tamiflu on the Internet, following the confirmation of cases of avian flu in Turkey and Romania, and a suspected case in Greece.

Bids for a single course of treatment, comprised of 10 capsules, had reached 104 pounds ($174.61) by midday Thursday before the auction was canceled. Some 28 bids were received for the drug, which was advertised as located in Birmingham, England.

There are lots of news articles out there on Tamiflu if you take a look. I saw a report on Global News last night here in Edmonton that said Alberta has taken the lead in Canada in terms of stockpiling the drug. We apparently have so much Tamiflu on hand, that our health department has started evaluating which provinces to share with first. Maybe we should be sharing with Europe too.

Read: CNET News.com

eBay acquires Skype

Post ImageI posted about the rumored deal on Thursday of a marriage between eBay and Skype. Today, the two companies announced that eBay would purchase Skype for $2.6 billion dollars:

Company executives said Monday that eBay plans to pay $1.3 billion in cash and $1.3 billion in stock to the global communications company. It has agreed to hand over up to an extra $1.5 billion, for a total payout of more than $4 billion, if Skype meets certain financial targets by 2008, according to a presentation to investors on Monday morning.

As I said previously, I am not sure how smart this was for eBay. Surely purchasing PayPal back in 2002 made a lot of sense, and they immediately saw a return on investment. And it was probably a rather large return, if I had to guess. Skype doesn’t make a lot of money, and might not ever make that much money.

If all the deal turns out to be is a communications network for eBayers, it’ll be pretty clear that it was a waste of money. eBay could probably have built their own system for far less. Who knows though, it might turn out to be a very wise investment. Maybe Meg Whitman knows something the rest of us don’t. Time will tell.

You can read the official press release here.

Read: CNET News.com

eBay+Skype – What about Amazon?

Post ImageThe big story today in the world of technology (or M&A, depending on how you look at it), originally reported in the Wall Street Journal, is that eBay is in talks to buy Skype for, get this, $3 to $5 billion (yes billion). Seems like anything but a match made in heaven to me. Mark Evans agrees:

eBay purchasing online auctions houses overseas makes sense as do moves into new areas such as online rental listings. But spending $3-billion to buy Skype puzzles me. If anyone can explain eBay’s strategic thinking, I’m open to be educated. For investors, eBay’s interest in Skype could be an alarming indication management is concerned about the growth prospects for the auction business, which may explain why eBay shares have fallen today.

Skhype!

Skype has become quite the media whore as of late, with rumored suitors in the last couple months including Yahoo, Microsoft, Google, News Corporation, and InterActive. Yahoo, Microsoft and Google balked at the purchase price, no doubt because they could build their own competitor for far less. Talks with the other two didn’t amount to anything.

Skype is horribly over-priced:

Om Malik has a post citing a Swedish newspaper that suggests Skype has annual sales of about $70 million. Doing a little quick math suggests a $2-billion to $3-billion purchase would give Skype a price to revenue multiple of 30 to 45 times.

And even more importantly, I can’t see how Skype and eBay result in any synergies. They are completely different businesses, and I don’t think eBay needs a communication network to grow. Furthermore, adding Skype to it’s portfolio may only create new headaches for eBay, who had to jump through hoops at times to get PayPal where it is today. Dealing with financial regulators is one thing; dealing with communications regulators is quite another.

What about Amazon.com?

So the question then, is what does Amazon.com do if the rumored eBay-Skype marriage turns out to be true? Surely there’d be some pressure on them to make a move, as their primary competitor these days is most definitely eBay.

One scenario: partner up with Google in a real hurry. eBay would have both PayPal and Skype under it’s wing, so it might make sense for Amazon.com to try and get in bed with Google and it’s Google Talk and Google Wallet (rumored) services. The other advantage for Amazon in this scenario is that it could happen very quickly, as opposed to building their own systems. On the other hand, Google is a competitor of Amazon’s already with Froogle and Amazon’s A9.

Another scenario would have Amazon build their own communications system, perhaps using Jabber. I don’t think Amazon sees itself as a development company so it would be a bit out of character, but if Google can do it, why not Amazon right? This scenario would depend very heavily on whether Amazon sees any advantage to having such a communications system. I would imagine they are scratching their heads a little right now about eBay and Skype too.

Any other ideas? It will be interesting to watch this one unfold!