What the eBay-Yahoo Deal Means to Google

Google’s CEO Eric Schmidt thinks everybody’s getting it wrong about the recently announced blockbuster ad deal between Yahoo and online marketplace eBay.

Schmidt argues it isn’t a blow to Google, as many believe.

Rather, it’s good for everybody on the Internet, he said May 25 during a public appearance.

What he’s commenting about is how Yahoo is now the exclusive provider of graphical ads that appear on eBay, and will provide some of the search gut work so potential buyers can window-shop. Yahoo’s also to promote PayPal, the online checkout feature eBay owns.

Many consider the deal to be a blow to Google, which will miss out on what is potentially a huge revenue trove.

What, me worry? Not Schmidt.

His point revolves around a few of his oft-stated core business beliefs.

Firstly, Google, Yahoo and other top Internet destinations earn most of their revenues by placing advertising on their Web pages.

So in the world of Internet search, according to Schmidt, there are some companies like eBay that are so important, as in, spend a lot of money on ads, that an entire industry may collapse in their absence.

Judging from Schmidt’s comments, another pillar is AOL, the online unit of Time Warner, which is so important that Google bought a 5 percent share of the firm to ensure future business deals.

Read the full story on IBMWatch.com: What the eBay-Yahoo Deal Means to Google

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