Tracking eBay's New Bid

There are still many doubters. "It's not clear to me that there are any synergies at all between eBay and Skype," says venture capitalist Peter Thiel, a cofounder of PayPal. Other observers openly wonder if adding Skype might actually hurt eBay and PayPal, since it would allow sellers to lure buyers easily off the network to complete a sale in private and avoid eBay's fees. Skype founder Zennstrom told NEWSWEEK that he himself had these concerns prior to selling to eBay, but that Whitman convinced him that improving communication between buyers and sellers could only help grow both companies. "This gray market will always exist," Zennstrom says. "But our job is to provide the tools people need to transact safely."

To quiet critics, Whitman will need to show that adding Skype has had a dramatic effect on her bottom line, and that it equips eBay to fend off mighty Google. Whitman says Google "is both a competitor and one of our best relationships," and notes that she speaks to CEO Eric Schmidt (a Princeton classmate) several times a month.

But that doesn't make a bit of difference to eBay sellers like Alexander Zacke, who also advertises his antiques store on Google's search engine. Overall, his business on eBay's U.S. marketplace this year has been flat. "It's like GM," Zacke says. "They make so many models, and most of them don't work. It's tough to be all things to all people." When she announces the next step in the Skype-eBay integration this week, Meg Whitman and her team will want to give important sellers like Zacke a reassuring phone call. Luckily, they now have the technology.

© 2006