- [Eric] just laughed. "It's a perfectly reasonable question, but it doesn't compute here," he says. "If I said at a meeting, 'Are we going to enter eBay's space?' everyone would look at me and say, 'Why? They do a fine job.' The genius of Google is that we find new ways to solve problems that were never solved before."
What's more likely is that Google's innovation in other areas will impact eBay. For example, some merchants are responding to increased fees on eBay by switching to Google AdWords and marketing and selling their goods directly to customers.
Google is quite aware of this. Eric Schmidt even said that Google is going after small merchants, trying to help them find customers for their products. And Google is doing it with more than just AdWords. Google's Froogle also makes it easier for people to find small sellers.
No one expects Google to launch an eBay look-alike. But it is likely that these two giants will find themselves increasingly pursuing the same customers. The more merchants can be discovered by customers using Google, the less those merchants need to use eBay.
[Newsweek article via John Battelle]
Update: Two years later, a BusinessWeek article reports the eBay "magic is gone ... Shoppers are simply not buying all the inventory anymore. Some items languish without a single bidder. Many shoppers opt for other sites including Amazon.com, use sophisticated search engines such as Google and Yahoo!, or head to store sites directly."