eBay has long denied it competes with Google. It was only 1 year ago that CEO Meg Whitman was quoted in the Financial Times newspaper saying she believed Google, Yahoo, eBay and Amazon would focus on their core activities rather than compete with each other head-on. In support of her prediction, Whitman said eBay specialized in ecommerce, payment and voice communication, while "Google stands for search."

Since that interview, Google launched its Checkout payment processing system and recently said it has ambitious plans for its Google Base offering (http://googlebase.blogspot.com/2007/01/big-plans-for-2007.html).

eBay meanwhile banned its sellers from using Google Checkout, and earlier this month, eBay said it would only protect buyers in PayPal-funded transactions. On Wednesday, eBay said it would begin requiring new sellers to accept PayPal or a merchant credit card in order to list items on the US and Canadian sites. The same day, Google started using its prime search page to advertise a special promotion offering buyers $10 to spend when they used Google Checkout.

On Thursday, gossip-blog Valleywag said the Google promotion signaled the end of a "cease-fire" between the companies. Valleywag said a former executive at eBay told it the two companies had "agreed tacitly in 2003 to stay out of each other's turf," and that as recently as last August, the two companies were still trying to avoid conflict (http://valleywag.com/tech/behind-the-news/google-breaks-ceasefire-with-ebay-229800.php).

Red Herring magazine concurred on Friday, calling the Google - eBay war "official" (http://www.redherring.com/Article.aspx?a=20838&hed=Google%2c+eBay+Go+to+War).

eBay said its decision to institute its Safe Payments policy in October 2005, now called the Accepted Payment policy, was based on safety concerns and input from the Community.

But eBay PowerSellers are getting itchy for eBay to let them process payments through Google Checkout. While eBay's payment service PayPal can cost 2.9% plus per-transaction fees, Google made Checkout free through the end of 2007. Those dollars add up, and the Internet Merchants Association (IMA) - a group of 200 top eBay sellers - started an online petition to demand that eBay leaders remove the ban on Google Checkout (http://www.petitiononline.com/ebayban/petition.html). eBay spokesperson Hani Durzy told Red Herring there was little if any merchant demand for Google Checkout.

eBay is increasingly finding itself bumping into Google folks at eBay seller events. The next such meeting will take place at the IMA conference next month, where eBay will present a session called "New in 2007," while Google will spend 3 hours explaining its AdWords, Google Checkout, Google Base and Froogle programs.

Sellers can only hope they will be the beneficiaries of battles between the behemoths.

Link to Financial Times interview with Meg Whitman:
http://www.ft.com/cms/s/ae2efcb0-9847-11da-816b-0000779e2340.html