The Googleplex Blog: Harold Davis's Blog

May the Great eBay, Google, Microsoft, Yahoo! Games Begin!

In a front-page article labeled Behemoths' Dance, the Wall Street Journal reports today that eBay is trying to find ways to lessen its dependence on Google by forming closer alliances with Microsoft and/or Yahoo!

Of course, I've seen the AdSense ads for eBay when I enter a search term such as antiques or Nikon D200. In fact, almost any search term query at all that might possibly be something one might buy brings up (among other AdSense search ads) an ad linking to eBay mentioning the item.

The eBay ads via Google cover so many terms that they sometimes overreach. I'll bet you didn't know you could buy thoughts on eBay. A Google search for thoughts returns this eBay ad:

Thoughts
Whatever you're looking for
you can get it on eBay.
www.eBay.com

Well, I gosh darn sure hope I can't buy what I'm thinking of right now on eBay (and, no, I won't tell you—it's private!).

In another example of overreaching in ad placement, a search for the term cliff returns (along with search results) this ad:

Cliff
Looking for Cliff?
Find exactly what you want today.
www.eBay.com

Now, I know you can find most things on eBay, but I haven't seen that many cliff auctions lately. Maybe I'm missing something. What I also seem to have been missing, at least according to the WSJ article, is the extent of money eBay pays Google—according to the Journal, eBay won't give out numbers, but a big chunk of its $400 Million annual online ad budget goes to Google—and the extent to which Google's traffic is vital to eBay. (On a personal note, when I want an eBay auction, I go straight to eBay. I can't remember having clicked through to eBay from a Google AdSense search ad.)

When eBay started placing these huge ad buys with Google starting in 2001, eBay did not regard Google as a competitive threat, just the vendor with the best search engine technology. In fact, eBay probably felt that as the customer spending the money they had the upper hand in the eBay-Google relationship. (A side note here: isn't it amazing how Google has been able to take advantage of the behemoth internet players to gain its current position, first honing its search engine technology at Yahoo's expense and then gaining literally billions of dollars of easy revenue from eBay since 2001?)

As Google's tentacles began to stretch wider, eBay came to consider whether Google was, in fact, a threat—and to wonder whether eBay's now deep dependence on traffic from Google constituted a giant vulnerability.

Certainly, Google wants to be the leading online entry point for online commerce, although it has a ways to go to achieve this ambition. Google Base, a free online classified service, is at least indirect competition to eBay—and direct competition to Craigslist, part-owned by eBay. Google is also developing an online payment service to compete with eBay's PayPal, although the Google service has yet to manifest itself in a serious way, and PayPal's ubiquity will be hard to rival.

eBay's response to all this is marked by internal confusion. At a summit meeting of eBay executives that met in the summer of 2005, role-playing was used to assess the threat. A "green team" thought from eBay's perspective and concluded that there was no threat and that business-as-usual should continue. In contrast, a "red team" thought from Google's perspective, and concluded that Google was planning a move into eBay's primary turf.

Clearly, eBay insiders are divided. As the Journal puts it, "Indecision within eBay will probably delay any conclusion." In the meantime, eBay is holding discussions with Google rivals Microsoft and Yahoo. Also, eBay's new WantItNow site is a shot across the bow of Google as online ecommerce entry point.

Often, I just want to buy something and not deal with the hassle of an online auction. In the past, I could have browsed through eBay looking for a Buy It Now button on the thing I wanted. But this was cumbersome. So usually I just put the item into Google or Yahoo (but mostly Google), and found someone to sell it to me. WantItNow features only items that are immediately available. It is an attempt to counteract this dangerous—to eBay—trend of using Google to find items available for immediate purchase.

It's not clear what will happen in the great eBay-Google-Microsoft-Yahoo games. These games will be great fun to watch, and are significant for the future of the web. The outcome will no doubt be studied in business schools of the future. For the meantime, the only thing that's really clear is that eBay does risk becoming marginalized by Google. In this scenario, eBay becomes simply another backend product supplier, and Google controls the gateway. Most likely, eBay continues to be viable (after all, why should Google choke such a good source of revenue?), but the brilliant future belongs to Google.

Buh-Bye: Ranting and Raving about Voice Response

One of my pet peeves is synthetic-voice driven customer support telephone lines. I find myself shouting into these things: "Operator! Person! Someone! Anyone! I WANT TO TALK TO A HUMAN BEING!"

It is kind of cool knowing I'm talking to a computer, because I can rant, rave, and curse all I like without having to feel remorse at exhibiting inappropriate behavior before a mere human cog in the machine. (Instead, I'm exhibiting it to a machine cog in the machine, who will probably remember me detrimentally the next time I try to do a really tricky bit of programming!)

Somehow all my upset never results in the computer at the other end transferring me to a "customer service" representative. Which is, I suppose, the point of the whole thing.

Voice-response customer service lines were brought to mind by a message flashing on my DirectTV last night advertising that the DirectTV phone lines had "improved" by going down this path. (It's another, minor pet peeve of mine that DirectTV sees fit to signal some stupid message to me by flashing a light in my bedroom on the TV-satellite controller box. What nerve!)

This trend of automating customer service using software that "understands" what you say is probably good for companies in this business like Nuance. But pretty obviously it's not good for consumers. If you've ever been frustrated trying to get through one of these systems, you'll know what I mean. I'm all for self-service help mechanisms where appropriate, but this is the forte of the internet, not a telephone that I've picked up.

So what gives? In his glib bestseller The World Is Flat, Thomas Friedman tells us (as if we didn't know) that outsourcing is here to stay. (Where tomorrow's lowest-cost outsource provider will be located is another question.)

Friedman, however, doesn't really pinpoint one of the main thrusts of outsourcing: many companies have come to believe that customer service is a cost center and a drain on their bottom lines. The less their customer service costs, and the more shabby their customer service, the better. These businesses are now marching to the tune of Wall Street's quarterly expectations, and do not realize that in the long term people do remember how they've been treated.

You can see an example of this disturbing trend in a voice-response customer service that places another obstacle in the way of getting through to a human being. It all reminds me of a Saturday Night Live skit I happened to see recently. David Spade and Helen Hunt play flight attendants saying "Buh-Bye" to passengers leaving an airplane. No matter what the passenger wants—for example, information about a connecting flight—the response is always "Buh-Bye." It's hard to convey how funny this gets (I know it sounds like real life, and not particularly funny, but you have to see Spade and Hunt in action) with lines like, "I said Buh-Bye and your mouth is still flapping!"

Finally, when the rude flight attendants have dismissed the last passengers, Spade picks up the intercom and calls for a protective escort to get out of the terminal.

Spade plays—for laughs—a flight attendant so rude he'll need an armed body guard to protect him from his customers. So will all these companies that have relegated customer service to impenetrable automated systems and the back of beyond.