disclosure: I am on the PayPal developers advisory board.
I was just studying the GBuy thread closer than I have looked and studied an issue in years. This could be the biggest competitive struggle we have seen since Microsoft vs Netscape.
Google vs Microsoft/Yahoo/AskJeeves, is/was for the shear horse race and sportsmanship value. I feel like the community has a clear interest in the outcome, but as a whole – regardless of the battle – we will continue and our outcome/survival is assured.
GBuy vs PayPal/Ebay though…this is a different kind of front here. Really for the first time, Google is poised to step into unknown water with ZERO experience at a real “all grown up” playing field.
When we look at some of Googles bigger offerings, a trend towards geekdom comes out:
Gmail – email systems are so 1996 with off-the-shelf programs available. They are ‘techie’ things.
Maps – there we are with window dressing on a Microsoft (Terra server) product from 97. Online Advertising buying/selling are essentially off-the-shelf..oldschool.
What else? When you look down the list of G offerings, there is little that Google has done up until now that is not purely “net related nerdvana stuff”.
But payments? This is an odd-man-out – a sunflower in the daisy patch. I can’t help but remember back to when Red Hat IPO’d and all the *nix geeks freaked out and wet themselves trying to get in on the action or even understand it. Many of those same geeks now work for Google. Have they learned anything?
Apparently – Googles main competitor for GBuy/GPayments will be Ebay/PayPal. How ironic that the last month, I have been using spare time to read, “The PayPal Wars” by Eric Jackson.
The most striking thing about the PayPal story is just how deep into the financial wars PayPal got. Their attempt at international monetary domination was meet with a full frontal assault by everyone from the powerful financial communities to the Russian Mafia.
PayPal looked like a gold mine for crime rings as well as sophisticated independent crooks trafficking in stolen credit cards. …With a CD-Rom full of stolen numbers and a robotic script designed to open PayPal accounts, Internet-savvy criminals could easily automate the creation of hundreds of thousands of dummy users. Those feeder accounts could then use the stolen credit cards to send payments through a layer or two of additional fraudulent accounts before the criminal initiated an ACH to transfer the balance out of the system.
To say that PayPal is the most battle hardened dot com on the web today is an understatement:
When the Russian and Nigerian mafias rung up online charges, they ultimately plundered PayPal, not the cardholder. While our customer base continued its explosive growth, these brazen criminals walked in through our front door and carried on their activities largely unmolested. In what we would later refer to as “a significant fraud episode,” one such fraud ring cost the company $5.7 million over a four month period in mid-2000.
From there we finally get some long over due answers from the PayPal side of things. One doesn’t need to dig too deep on the net to find some very PO’d people teeing off on PayPal. There were a few, but vocal group of people that had their PayPal accounts frozen in the midst of the all out fraud assault on PayPal. It was always assumed that those accounts were some how caught up in the fraud schemes PayPal was fighting. For the first time, we have a few comments from PayPal on the story:
PayPals success in fighting back fraud also produced false positives that inconvenienced honest users…. But as bad as the false positives experience for innocent users and resulting negative publicity for the company might have been, it was an acceptable cost. The fact that spiraling fraud losses contributed to many of our competitors, like eMoneyMail, PayMe, and PayPlace ceasing operation made this an easy choice. Had PayPal not found a way to get fraud under control, it would have destroyed the company.
Whatever the outcome – this is going to get interesting. PayPal/Ebay are clearly not a bunch of sheep.
If you are looking for some insight into GBuy vs Ebay, I would read the PayPal Wars.
Questions still remaining:
- Has PayPal still got fight in them?
- Has Ebay Neutered PayPal?
- What could Ebays possible response be?
bt
…The early bird gets the worm, but the second mouse gets the cheese.
