Yahoo and Ebay have just announced a far reaching and not so surprising alliance. It's design is primarily for the web portal king (Yahoo der!) and the e-commerce queen (Ebay with less der!) to get together and initially generate more revenues - Ebay runs text and banner ads for the first time and Yahoo gets a new ad partner/customer. But that's just the short term stuff.
Longer term this partnership is designed to leverage the unique assets that both companies have to keep them strong versus the expanding power of Google and MySpace. For both have cracked a model which allows them to deliver a broad set of ad based and commerce based services. So both Yahoo and Ebay fear that their businesses will suffer increasingly at the hands of the other two.
And yet, neither Yahoo nor Ebay want to (or can afford to) go it alone and fight on both portal and commerce lines. If they join together and cross promote to each other's communities they can focus on their strengths while still undermining Google and MySpace future attempts to bury them both.
So Yahoo will promote Ebay more and more to their users as well as integrating PayPal for Yahoo users to pay for Yahoo goods and services. Yahoo will also likely integrate Skype more closely with Yahoo Messenger - with Ebay "click to call" a good starting point.
But down the line we could see Yahoo and Ebay offering joint products leveraging eachother's core strengths to further hurt their core competitors. Ebay may offer a content marketplace for Yahoo Music and Video etc.
While the partnership is a positive move for both parties it probably will not affect Google or MySpace too much - in fact it may make them compete with Yahoo and Ebay even more as they need not worry about being nice to them any longer.
The competitor that is worse affected by this announcement is Microsoft's MSN for they hoped to partner with both Yahoo and Ebay. Oh well, back to the partner drawing board for Microsoft.
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