Is eBay coming between MySpace and Google?

Last August, Google won a bidding war with Yahoo to provide search and advertising services for News Corp.'s MySpace.com.

The $900 million deal was seen as a boon for both sites. But now the agreement may have faltered, the Wall Street Journal has reported, and the culprit may be eBay.

According to the paper, MySpace has been talking to the online auction site about what it calls "peer commerce," allowing MySpace users to buy and sell items from one another using eBay's technology and its PayPal payment system. This isn't sitting well with Google, which has been aggressively promoting its Google Checkout service over the past few months.

According to the newspaper, the paperwork between MySpace and Google still has yet to be signed, but execs close to the matter say some sort of agreement can still be worked out.

Blog community response:

"If the deal did go ahead, we think it would be very successful. MySpace users are young and presumably more likely to trade items than buy them new. What's more, trading among your MySpace friends adds a layer of trust that isn't so present on the eBay site. Not to mention that highly active youth demographic that eBay surely craves."
--Mashable

"Though this deal won't derail that deal, it does underscore the complicated relationship between Google and eBay. The companies often -- not very convincingly -- describe each other as partners. A more accurate description is that they are stuck with each other. eBay is one of the largest buyers of keyword advertising on Google. The auction site is dependent on Google for traffic. eBay probably needs Google more than the other way around."
--Blogging Stocks

"The interesting thing is in the negotiations part of the story. A MySpace/PayPal deal was on the cards long ago. It looks like it would allow MySpace to stay in control and demand a large cut of any revenue sharing deal by using a basic divide & conquer strategy after all."
--Communication Breakdown