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February 8, 2006 2:00 am

Ebay sees Google, Yahoo, Amazon divergence

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The four dominant internet groups - Google, Yahoo, eBay and Amazon - will increasingly focus on their core activities rather than compete with each other head-on, according to Meg Whitman, eBay's chief executive.

"I think we will end up specialising," she told the FT in an interview on Tuesday. "We have specialised in e-commerce, payment and voice communication. Google stands for search, Yahoo largely stands for content - so I think we may on the fringe compete, but I suspect that over time the businesses will become more specialised."

Her views contradict the widely held notion that the four internet giants will engage in increasingly fierce competition as they try to match their rivals' services. Google, for example, recently launched Goggle Base, a classified advertisements website that puts the company in direct competition with eBay.

Meanwhile, eBay has long moved beyond its roots as an online auctioneer and sells some 34 per cent of its merchandise at fixed prices. In 2002, it acquired the PayPal online payments business, last year it bought Skype, a web-based telephony group, and it has invested heavily in its own search engine.

Ms Whitman said she had no plans for further big acquisitions this year, stressing that 2006 "is going to be a year of consolidating the Skype acquisition and leveraging the synergies between eBay, PayPal and Skype".

She said: "Skype has 200,000 new users a month. We would like a lot of those people to have PayPal accounts, so there's a nice synergy there. We also want to expand Skype buttons on eBay [which allow users to contact each other by clicking on them].

"The reason we want to do that is that we want to increase the velocity of trade. If the buyer and seller can talk to each other, especially with high-end items, we think it can accelerate trade."

Ms Whitman said eBay would continue to expand rapidly even in its mature markets, such as the US, Britain and Germany.

"We hope that innovation around new formats, innovation around customer support and innovation around Skype can continue to keep the growth rates high in our mature markets."

She highlighted the new eBay Express site as crucial for the group's continuing growth in the US and elsewhere. "It will pull together the new and in-season items in a fixed-price format. I think that will encourage more buying occasions. If, for example, you want a gift that you need in a couple of days you might just want to get in and out, and this will provide a more convenience-orientated shopping experience."

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