Monday, July 8, 2002

eBay to Buy PayPal

The only thing shocking about eBay’s acquisition of PayPal for $1.5 billion is why eBay waited until after PayPal’s successful IPO. This is a good move ( combination of two market leaders), but Meg really should have done this a year ago. I think what probably tipped it (this is just a guess) is that PayPal’s much-vaunted fraud detection. It’s kept their costs low – and if eBay scraps their own BillPoint service (or at least folds it into PayPal’s infrastructure), they’ll use that cost-savings to achieve scale that PayPal couldn’t have done on its own.

Looking down the road a bit, this solidifies eBay’s move into infrastructure. They started out as an infrastructure for selling things – now they’re adding a payment infrastructure. Both are intangible and complementary. What should their next move be? Publishing? Media distribution? eBay is looking more and more legit as a big-business play.

On a final note, it’s nice to see companies being acquired for 10x multiples of revenues again… (!) Long live the . coms!

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