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eBay and Google a Coopetition Perspective

eBay and Google a Coopetition Perspective

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Published by Patrick Breitenbach

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Published by: Patrick Breitenbach on Sep 05, 2007
Copyright:Attribution Non-commercial

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10/12/2011

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eBay and Google: A Coopetition Perspective
Julien Decot and Steve Lee
May 29, 2006
 
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Table of Contents
Abstract...............................................................................................................................31.Defining the Business Problem...................................................................................52.Current Relationship.................................................................................................123.Financial Analysis.....................................................................................................194.Possible Next Moves.................................................................................................275.Future Relationship...................................................................................................386.Conclusion................................................................................................................41Appendix...........................................................................................................................43
 
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Abstract
When we originally undertook this project in December 2005 we set out toanalyze eBay and Google’s historical, current, and future relationship and makerecommendations based on our research. Much has transpired since the outset of theproject including front page
Wall Street Journal
articles on the subject and an extensiveeBay and Yahoo partnership formed. The paper now best serves as a rationale for therecent actions taken by eBay.eBay and Google historically have been known for auctions and search,respectively. In the past, there has been little overlap in terms of products, customers, orbusiness models. Yet, the companies have developed dependencies on each other asGoogle is one of eBay’s largest sources of user traffic and eBay is one of Google’slargest customers.As the two most successful Internet companies with impressive growth rates andprofit margins, the companies have set investors’ expectations high. Thus, thecorresponding stock valuations of the companies have tremendous growth expectationsbuilt into the price – 35% for eBay and 65% for Google over the next 5 years –whilemaintaining lofty margins. To meet these expectations, eBay and Google must assessnew markets to enter and, as they begin to encroach on each other’s turf, determine whatform their relationship should take. There is a risk this increased competition will putpressure on margins. If this happens, the corresponding increase to the already loftyrevenue growth expectations possibly makes the growth unattainable.The two companies take very different approaches to their growth strategy. eBaymakes few, large investments in carefully calculated markets that strengthen their core

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