Through the fall, groups of Yahoo executives, including Chief Operating Officer Dan Rosensweig and Chief Financial Officer Sue Decker, considered ideas, including making PayPal an integral part of Yahoo's shopping business as well as a back-office payment system for Yahoo's advertisers. Yahoo would syndicate its ads on eBay's site. The pair also talked about embedding a link to eBay's Skype phone service within Yahoo's ads, enabling consumers to immediately call the retailer in question over their PCs, say people familiar with the matter.
In addition to the talks with Yahoo and Microsoft, eBay considered buying or building its own search and ad technology. Some eBay executives advocated staying neutral, doing business with none or all three search companies equally.
In December, eBay told Google about its talks with Microsoft and Yahoo, says a person familiar with the matter. EBay wanted to see what Google would offer, but Google showed little interest.
In February, Google approached eBay about pursuing a competing agreement. The proposed partnership would let Google run ads on eBay's sites and, much like Yahoo's proposal, would find a way to promote Skype, according to a person familiar with the situation.
EBay had to consider the Google offer, says a person familiar with the matter, because Google's search technology was still superior to that of Microsoft and Yahoo. Since early this year, eBay's talks with the three suitors have ebbed and flowed and all three are trying to sweeten their offers; eBay is still in discussions with all three, say people familiar with the talks.
Indecision within eBay will probably delay any conclusion. Some eBay insiders think Google's momentum is widening its technology edge. Others say that building closer ties to Google would be like "letting the fox into the henhouse," says one person familiar with the matter.