July 5, 2006 4:00 AM PDT

With Checkout, Google is ready to take your order

In 1999, Microsoft caused a tech industry ruckus when it introduced Passport, an online wallet and payment system that would allow shoppers to use one sign-in username and password to buy things from multiple retailers.

Privacy advocates fretted, a group of companies banded together to form a rival effort, and Microsoft Passport was scaled back after merchants failed to sign up.

Last week, Google introduced Google Checkout, an online checkout system that lets people make purchases from participating merchants using a single sign-in system. Google gives its AdWords paid search customers a discount to use the service. An icon on their ads tells shoppers they can make a fast purchase from that store.

It's a similar idea, but a different company, different time and no privacy hubbub--at least not yet. It begs the obvious question: Does the world really trust Google--the company with the "Do no evil" motto--that much more than Microsoft, the company sued by the Justice Department on antitrust grounds?

To answer the question, experts point to both the contentious period in which Microsoft launched Passport and noticeable differences in the companies' technology implementations.

"There was a lot of hullabaloo about Passport from the Electronic Privacy Information Center and others" when Microsoft introduced Passport, said Greg DeMichillie, a senior analyst at Directions on Microsoft. "A lot of that was focused on Microsoft's integration (of Passport) with Windows XP."

"It was also coming in 2001 when the Justice Department (antitrust) case was still going on against Microsoft," he said.

Passport also suffered from some security glitches and experts complained that Passport lacked adequate security protections.

In response to Passport, Sun Microsystems and others launched the Liberty Alliance in 2001 as a competing "digital identity" effort. Importantly, it was not controlled by one company.

When it came down to it, consumers didn't want to be forced to use Passport and companies didn't want Microsoft to be in control of the customer information, analysts said.

"There is a greater level of trust with Google."
--Charlene Li, analyst, Forrester Research

Passport initially attracted some big-name merchants, including Monster.com and eBay. But by 2005 they were gone. Passport was scaled back and now offers single sign-on for Microsoft services only. It lives on in Windows Live ID, which is part of Microsoft's latest effort to focus on Web-based services and software.

Microsoft representatives declined to be interviewed for this article.

Compare that with Google Checkout's reception so far. Privacy groups, who were quick to assail Google's contextual-based targeted ads in Gmail two years ago, have been silent. And Google already boasts a roster of affiliate merchants, including Levi Strauss, Buy.com, Ace Hardware and Starbucks.

Checkout versus Passport
So what's the difference?

"People are not required to use Google Checkout, whereas Passport was the primary payment system" for Microsoft affiliates, said Charlene Li, an analyst at Forrester Research. "It was clear that Microsoft wanted to be the only registration and shopping wallet on the merchant sites."

Google Checkout merchants, meanwhile, can offer other checkout systems if they choose.

"There is a greater level of trust with Google," Li said.

Google also has a built-in merchant base in its hundreds of thousands of AdWords customers, something Microsoft didn't have at the time.

"Google already has a relationship with these Web sites with AdWords," said DeMichillie of Directions on Microsoft. "Microsoft was coming in cold...They really ran into a wall trying to convince third parties that it was worth doing."

Of course, Microsoft wasn't the only company to have a false start with a payment service. Yahoo, Google's chief rival in search, scrapped its PayDirect payment service for its online auctions in 2004. The company still has an online checkout system called Yahoo Wallet, which is limited to people buying Yahoo premium services and products from Yahoo's small-business merchants.

Yahoo also has teamed with eBay's PayPal and will likely integrate the popular PayPal payment system into Yahoo services, a Yahoo spokeswoman said.

But Google Checkout isn't in the clear just yet, said a Liberty Alliance representative.

"Some sophisticated technologists are concerned about the volume of information that could be aggregated here (in Google Checkout)," said Roger Sullivan, vice president of the Liberty Alliance Management Board and vice president of business development for Oracle's identity management solutions. "But that is mitigated by the fact that users are becoming more savvy about the level of information they will disclose."

The Liberty Alliance would welcome Google's participation in the group, he said. It was unclear whether Google would consider working with the group.

"Anything that advances the idea of authenticated and secure users...and advances the visibility and recognition in the industry is a good thing," Sullivan said.

Google may still run into some of the opposition from merchants that led to Passport's downfall, said Li of Forrester.

"Part of me says some big merchants will be concerned about Google capturing that customer data, but some may be willing to give it up to get better conversion (to sales)," she said. "In the end, money talks and if Google checkout can make them more money, they'll use it."

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Google Checkout, merchant, Google AdWords, antitrust, Checkout

33 comments

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It Sucks...
I tried to use Google Checkout on Zales website but the free promotional shipping wasn't available when you used Google Checkout so, it would have cost me $13.00 to use the service.

Using Zales regular checkout process the free promotional shipping was applied automatically. Also, most sites won't allow coupons or promo codes if you use Google service.

It's kinks like there that going to kill the service very quickly.
Posted by mstrclark (62 comments )
Reply Link Flag
It Sucks...
I tried to use Google Checkout on Zales website but the free promotional shipping wasn't available when you used Google Checkout so, it would have cost me $13.00 to use the service.

Using Zales regular checkout process the free promotional shipping was applied automatically. Also, most sites won't allow coupons or promo codes if you use Google service.

It's kinks like there that going to kill the service very quickly.
Posted by mstrclark (62 comments )
Reply Link Flag
Could be a good thing
As a merchant, I like to deliver the most convenient way possible, and for the least cost. If the new system proves to be secure, I can't imagine anything more convenient for the customer. Will they be better than PayPal who certainly delivers on the quick, easy and secure promise?

Tieing into the adwords users is a brilliant idea. But it might intice people to try to use adwords who don't know what they're doing and they'll lose a lot of money real quick. Adwords is a very risky investment for a small business if you don't know what you're doing. If you pay $1 per click and get 2000 clicks, that's $2000 you owe. Now if you get the industry standard of 1% in sales, and you sell a $20 item, You made $400, not including fees. You are now only in the hole $1600. That can happen in one day.

So I'm thinking this might be a good thing for big business, but the small guy will have to be careful.

Just my 2 cents -

Carole
CommonSenseLiving.com
Posted by CleanFreak (5 comments )
Reply Link Flag
some corrections
I'm sure you meant a $2000 item, not a $20 item.
Posted by zboot (168 comments )
Link Flag
Could be a good thing
As a merchant, I like to deliver the most convenient way possible, and for the least cost. If the new system proves to be secure, I can't imagine anything more convenient for the customer. Will they be better than PayPal who certainly delivers on the quick, easy and secure promise?

Tieing into the adwords users is a brilliant idea. But it might intice people to try to use adwords who don't know what they're doing and they'll lose a lot of money real quick. Adwords is a very risky investment for a small business if you don't know what you're doing. If you pay $1 per click and get 2000 clicks, that's $2000 you owe. Now if you get the industry standard of 1% in sales, and you sell a $20 item, You made $400, not including fees. You are now only in the hole $1600. That can happen in one day.

So I'm thinking this might be a good thing for big business, but the small guy will have to be careful.

Just my 2 cents -

Carole
CommonSenseLiving.com
Posted by CleanFreak (5 comments )
Reply Link Flag
some corrections
I'm sure you meant a $2000 item, not a $20 item.
Posted by zboot (168 comments )
Link Flag
3rd Story on Google Payment System
In the last 7 days from news.com Surely there is other news? How many different ways can you rehash the same old stuff?

KM
Posted by kieranmullen (1070 comments )
Reply Link Flag
3rd Story on Google Payment System
In the last 7 days from news.com Surely there is other news? How many different ways can you rehash the same old stuff?

KM
Posted by kieranmullen (1070 comments )
Reply Link Flag
There is another factor..
People just don't care.
Posted by lsallen (4 comments )
Reply Link Flag
people do care
this could greatly boost e-commerce, also its a good shot for Google to diversify its income.

it's also scary because if successful, they really may start to have too much influence over the internet..and if Microsoft can't deal with these guys....who can?
Posted by df561 (94 comments )
Link Flag
There is another factor..
People just don't care.
Posted by lsallen (4 comments )
Reply Link Flag
people do care
this could greatly boost e-commerce, also its a good shot for Google to diversify its income.

it's also scary because if successful, they really may start to have too much influence over the internet..and if Microsoft can't deal with these guys....who can?
Posted by df561 (94 comments )
Link Flag
I don't trust...
...Google any more than Yahoo!, Microsoft, PayPal, ebay, Sun Microsystems, Apple or any other large greedy corporation. They do whatever they have to to make a buck. They can careless about their customers.

Robert
Posted by Heebee Jeebies (632 comments )
Reply Link Flag
Why should we trust Google
Google has already made it clear that privacy means nothing to them by serving up ads based on content included in e-mails in their GMail service. The thought of Google aggregating payee data is a scary thought.
Posted by kenchangsf (3 comments )
Link Flag
I don't trust...
...Google any more than Yahoo!, Microsoft, PayPal, ebay, Sun Microsystems, Apple or any other large greedy corporation. They do whatever they have to to make a buck. They can careless about their customers.

Robert
Posted by Heebee Jeebies (632 comments )
Reply Link Flag
Why should we trust Google
Google has already made it clear that privacy means nothing to them by serving up ads based on content included in e-mails in their GMail service. The thought of Google aggregating payee data is a scary thought.
Posted by kenchangsf (3 comments )
Link Flag
Trust Google? Not me...
What a deal - with Google Search, GMail, and Google Checkout, the company will be able to put together a nice comprehensive dossier on their customers.
Posted by john55440 (1020 comments )
Reply Link Flag
Trust Google? Not me...
What a deal - with Google Search, GMail, and Google Checkout, the company will be able to put together a nice comprehensive dossier on their customers.
Posted by john55440 (1020 comments )
Reply Link Flag
Big differences
With Google it is no worse (and in fact better, see below) than buying online.
Google does not have any of your money, it only stores the data required to complete the purchase, not your passwords.

I think you are better of with this service because your CC number is not revealed to all these online stores with questionable security measures.
Also, you can get less SPAM by not reavealing your email address to the merchants.
Posted by AbuLafya (86 comments )
Reply Link Flag
Uhh.. . NO
You seem to have misled yourself as to what google is doing. Google's service allows you to maintain your payment AND contact information in one place, rather than having to create an individual account with EVERY merchant you want to buy from.

The merchants will need to have your email address, after all, how exactly would they contact you if something goes wrong with your order? You still have the same potential to be spammed, you may just gain some protection if googles TOS prohibit the companies from spamming you. . . as opposed to the merchant's TOS when you register. . . which is usually worded to give them as much leeway as possible.
Posted by zboot (168 comments )
Link Flag
Big differences
With Google it is no worse (and in fact better, see below) than buying online.
Google does not have any of your money, it only stores the data required to complete the purchase, not your passwords.

I think you are better of with this service because your CC number is not revealed to all these online stores with questionable security measures.
Also, you can get less SPAM by not reavealing your email address to the merchants.
Posted by AbuLafya (86 comments )
Reply Link Flag
Uhh.. . NO
You seem to have misled yourself as to what google is doing. Google's service allows you to maintain your payment AND contact information in one place, rather than having to create an individual account with EVERY merchant you want to buy from.

The merchants will need to have your email address, after all, how exactly would they contact you if something goes wrong with your order? You still have the same potential to be spammed, you may just gain some protection if googles TOS prohibit the companies from spamming you. . . as opposed to the merchant's TOS when you register. . . which is usually worded to give them as much leeway as possible.
Posted by zboot (168 comments )
Link Flag
Broken Record
It seems to me the constant complaints about google are
frivolous to say the least. Privacy? In the US, librarians are legally
bound to report to the government what books you read (bravo
that many have refused). In my latest country of choice,
Australia, privacy has flown out the window as the govt. here
just passed draconian laws destryoing privacy and human rights
e.g. the law now states that a person can be arrested for the
posession of a 'thing'. The first poor sod to be charged under
this law had posessed aerial photos of terrorists training camps.
A spy? In fact the photos were legally opbtained from a public
Israeli wesbite. Furthermore, it is the government which decides
if a defence lawyer is allowed to view the prosecution's evidence.
And Australia now has the most tapped telephones per capita
than any nation in the world, yet few here even know about it
(thanks to a tightly controlled media. Hopefully an independent
judiciary will rule against these ridiculous laws, as is inevitably
the case when they reach the higher courts.

My point is, when talking about google and privacy rights, I'd
rather trust them than any government of the new right.
Posted by flashfast (38 comments )
Reply Link Flag
Broken Record
It seems to me the constant complaints about google are
frivolous to say the least. Privacy? In the US, librarians are legally
bound to report to the government what books you read (bravo
that many have refused). In my latest country of choice,
Australia, privacy has flown out the window as the govt. here
just passed draconian laws destryoing privacy and human rights
e.g. the law now states that a person can be arrested for the
posession of a 'thing'. The first poor sod to be charged under
this law had posessed aerial photos of terrorists training camps.
A spy? In fact the photos were legally opbtained from a public
Israeli wesbite. Furthermore, it is the government which decides
if a defence lawyer is allowed to view the prosecution's evidence.
And Australia now has the most tapped telephones per capita
than any nation in the world, yet few here even know about it
(thanks to a tightly controlled media. Hopefully an independent
judiciary will rule against these ridiculous laws, as is inevitably
the case when they reach the higher courts.

My point is, when talking about google and privacy rights, I'd
rather trust them than any government of the new right.
Posted by flashfast (38 comments )
Reply Link Flag
Trust on Google
I think just everthing google produces is duped as a threat on Microsoft.

I think google threat to Microsoft is just like creating a analogy between OS and a application running on it.

Google work is just 15-20% of work microssoft does?

And its like everybody likes to enjoy a falling star but only till the time when they see its actually falling on them.

Kalpesh
Posted by kalpesh_bhandari (3 comments )
Reply Link Flag
Trust on Google
I think just everthing google produces is duped as a threat on Microsoft.

I think google threat to Microsoft is just like creating a analogy between OS and a application running on it.

Google work is just 15-20% of work microssoft does?

And its like everybody likes to enjoy a falling star but only till the time when they see its actually falling on them.

Kalpesh
Posted by kalpesh_bhandari (3 comments )
Reply Link Flag
Message has been deleted.
Posted by (156 comments )
Reply Link Flag
Just another Mac guy
I'm an Apple fan, but what was the point of that random link to Apple's new educational iMac?
Posted by nmcphers (261 comments )
Link Flag
nothing like passport
Passport tried to be a universal -login- Google Checkout is like having another credit card. That's why it's called "Checkout" excellent naming decision...it really makes it clear what they are up to.

So to compare it to Passport is way off. It is better to compare it to Paypal Merchant services...and PayPal is certainly successful.
Posted by df561 (94 comments )
Link Flag
 

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