Last week, an article in the New York Post reported that Microsoft has initiated “preliminary negotiations” with eBay regarding its intention to acquire the giant online auction house and merge it with MSN.
 |
Microsoft CEO Steve Ballmer. Source: Reuters |
Both Microsoft and eBay declined to comment. “The information that the public is aware of is merely speculation, and we will not comment on rumors,” said an eBay spokesperson. Microsoft provided a similar sentiment.
However, analysts, bloggers, and the interested public have not stopped buzzing about this possibility and what Microsoft could gain from acquiring eBay.
Enhancing MSN
Microsoft has two options: either to upgrade MSN on its own, making it a true competitor to Google, or to take a different approach, such as acquiring eBay,” said Martin Reynolds, an analyst at Gartner.
“Google is quietly pushing Microsoft aside, but eBay would provide Microsoft with a completely new direction.”
Reynolds also mentioned that eBay’s acquisition of Skype last year would give Microsoft another “bargain.” However, he warned that acquiring eBay would be an “extremely costly” endeavor for Microsoft.
Stacey Quandt, an analyst at Aberdeen Group, agreed with Reynolds that owning eBay would help Microsoft “transform entirely.”
“If Microsoft acquires eBay, MSN will certainly become a robust entity and attract a large community of users, thanks to the popularity of Skype and PayPal. MSN needs exposure from eBay to become a leading content and service provider.”
Not an Easy Move!
However, analyst Avivah Litan from Gartner cautioned about the other side of the issue. “I completely understand MSN’s motivation to acquire eBay, but it will undoubtedly have a negative impact on eBay’s stock value.”
“Microsoft lacks the experience and expertise in actual commerce and e-commerce. The two companies have no natural connection beyond both having significant positions on the Internet. Certainly, there are many ‘less painful’ ways for Microsoft to boost MSN.”
Rumors of a mega-merger between eBay and Microsoft emerged after the announcement of a partnership between eBay and Yahoo last week. According to the terms of the agreement, Yahoo will become the exclusive provider of all static advertising for eBay.
Meanwhile, eBay’s online payment service PayPal will also be integrated into Yahoo’s “e-wallet” system. As a result, users can pay for services on Yahoo through their PayPal accounts.
Destiny
