EBay reduces ad spending on Google

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The simmering tensions between Google and Ebay, one of the search engine’s biggest advertising customers, spilled over into a public spat on Wednesday as Ebay forced its rival to abandon an effort aimed at luring away its customers.

Google’s retreat came only after Ebay cut some of its advertising spending on the company’s search site, in what appeared to be a blunt attempt to warn Google off. An Ebay spokesman could not immediately be reached to comment on its tactics.

The stage for the confrontation was set at the start of this week when Google Checkout, an online pay service that rivals Ebay’s Paypal, advertised plans to hold a party in Boston on Wednesday night aimed at attracting Ebay’s customers. The party was scheduled to coincide with Ebay Live, an annual conference that has become its biggest customer event.

Addressed directly to Ebay’s sellers, the Google party invitation asked them to come to “a celebration of user choice” at the “same spot where revolutionaries launched the Boston tea party to celebrate freedom”.

By late on Wednesday, however, Ebay’s apparent implied threat to punish Google by pulling advertising had forced Google to change its stance. In a posting on one of the company’s blogs, Tom Oliveri, a Google product marketing manager, wrote: “We at Google agreed that it was better for us not to feature this event during the Ebay Live conference.”

While not commenting on the tensions between the companies, he added: “Ebay Live attendees have plenty of activities to keep them busy this week in Boston, and we did not want to detract from that activity.”

Ebay’s concerns about the strategic threat led it last year to form a broad defensive partnership with Yahoo, though it has also formed a partnership with Google.

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