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Get ready for a showdown in cyberspace that's going to change how you shop . . . again. The contest pits Google (GOOG, news, msgs) against eBay (EBAY, news, msgs).
When the dust settles, at least three things will look very different in the world of retail.
- Google will have moved beyond search and morphed into a major intermediary -- efficiently connecting shoppers and sellers in a way that makes it look a lot more like, well, eBay.
- A new search technology that it's refining -- dubbed "programmable search" -- will make it easier for consumers to dig into store inventories and find exactly what they are looking for both on and off line, at the best price.
- Ebay and its shareholders will suffer as buyers and sellers migrate away from eBay's platform and set up their own storefronts on the Web.
We saw round one of this spat in mid-June, when Google wanted to throw a seemingly innocent party in Boston. It just happened to be during the week of the annual eBay Live user conference, in which "power sellers" rub elbows with the powers-that-be at eBay and celebrate the popular online auction site.
Whose victory?
Google's party -- complete with free massage, drinks and food -- was to be just a short, free bus ride (provided by Google) from the eBay Live event. Google's Checkout Freedom Party was supposed to introduce a new online payment system called Checkout to eBay users.Google's Checkout is banned on eBay because the auction giant sees it as a competitor to its own PayPal payment system. When news of the Google party surfaced, eBay cancelled its advertising on Google. Google then backed down and cancelled the party. About a week later, eBay resumed Google advertising.
Since the auction site didn't lose much traffic during the boycott, conventional wisdom holds that you can score a victory for eBay. "The data suggests that Google may be less powerful than people thought, at a time when the search engine is seeking to widen its empire," wrote Tom Bawden of The Times, a British newspaper. The New York Post's Janet Whitman agreed that the turn of events showed eBay "may not be so dependent on Google as many had thought."
A word of caution: Accepting this takeaway on the Boston scuffle could be hazardous to your investment wealth, because few things could be further from the truth. "If Google was ever to get serious about eBay's space, eBay would likely be in a lot of trouble because they could cut off much of eBay's air," says technology consultant Rob Enderle.
Getting with the program
That's about to happen. For a more detailed analysis of why this is so, and what the Boston scuffle really signified, I turned to Bear Stearns (BSC, news, msgs) analyst Robert Peck. I also checked in with an ardent Google watcher and online technology expert named Stephen Arnold of Arnold Information Technology.They've pored over patent documents filed by Google earlier this year and have come to a big conclusion: Google is in the process of using its powerful database technology to take search to a whole new level by introducing something called a programmable search engine. This will allow Google to become more like eBay -- a key player in matching buyers with sellers -- and probably make it easier for you to shop for stuff, as well.
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Currently, Google sorts search results in part by giving preference to sites with more links. This serves as a kind of vote of confidence that a site is worth looking at. But programmable search will take things a big step further. In programmable search, Web masters will tell Google’s search engine how to interact with their sites and what to do with the contents. For example, they can tell it to dig up detail on what products are in inventory and how much they cost. Or they can tell Google’s search engine to display selected password-protected information. On the user side, Google's search engine will be "programmed" in the sense that it will respond to search queries in a tailored manner, based on a user’s past behavior.
One-stop shopping
In the retail space, this change will make it easier for consumers to use Google to find out about available inventory at nearby retailers.Let's say you live in Greenwich, Conn., and you want to buy a Mercedes. Now, if you type in "Mercedes" and "Greenwich Conn." you get back the name and location of a local Mercedes dealership. With programmable search, you could also get a list of what cars are available on that dealership's lot.
There's a big advantage in this for the Mercedes dealer, too. Search histories can be used to figure out the tastes of a shopper and understand which car to display more prominently. Profiling a user's search patterns may determine, for example, that she's more likely to go for a convertible than a stodgier model.
Continued: Marketplace connections
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