Monday, June 19, 2006

Reuters report on GBuy

Google tests Web buying system, says unlike PayPal

Thu Jun 15, 2006 4:22pm ET
NEW YORK, June 15 (Reuters) - Internet search leader Google Inc. (GOOG.O: Quote, Profile, Research) is testing a system that aims to speed purchases online but bears no resemblance to the popular PayPal payments service of Web auctioneer eBay (EBAY.O: Quote, Profile, Research), Google's chief executive said on Thursday.

Analysts have speculated whether Google would enter into direct competition with PayPal, dubbing its potential new service "GBuy" to capture commercial transaction data.
Google's system aims to allow quicker purchases by a consumer from a marketer, and a beta version is expected soon, said Google CEO Eric Schmidt.

"It's not like PayPal at all," Schmidt said when asked about "GBuy" during a New York meeting hosted by Conde Nast's Portfolio business magazine.

"It makes no sense for us to go into businesses that are occupied by existing leaders," he said. "We want to solve new problems in the payments space."

He said the system was targeted at advertisers and not general consumers, but did not elaborate further on how it differed from PayPal.

"Google management is getting off on a technicality" in saying its purchasing system differs from PayPal, said RBC Capital Markets analyst Jordan Rohan. "A merchant-to-consumer payments system, that's close enough."

In a research note last week, Rohan wrote that Google was likely to launch such a service by the end of the month, saying there was no reason it could not expand to consumer-to-consumer transactions like many PayPal payments.

Google would not charge merchants for the service during the beta phase, but could be expected to take fees of up to 2 percent after some period of time, Rohan wrote.

"You have to target the advertisers first," he said, referring to the need to get a critical mass of merchants on board to make a purchasing system attractive to consumers.

Google officials could not immediately be reached for further comment.
© Reuters 2006. All Rights Reserved.

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