Since the early 2000s, online auction site Ebay and online payment processor PayPal have gone hand in hand, revolutionizing online shopping and payment processing. Now, this tight relationship is coming to an end.
Today, Sept 30, 2014, Ebay Inc. announced Ebay and PayPal will become two separate entities in the second half of 2015. I’ve read Ebay’s online statement on the matter and they have some great points on how it will be beneficial for everyone. But what that statement didn’t tell you is activist hedge fund billionaire Carl Icahn has been fighting for this split for months. He believes this move will highlight each company’s strength and focus more on their core business. For example, now Ebay can become a better online shopping center and PayPal can become a better payment processing system after the split up, according to Mr. Icahn. But Ebay chief executive John Donahue doesn’t agree. He’s always believed them being together will play on each others’ strength. Oh, John Donahue will resign as soon as this split is complete. Next year, when PayPal begins their new adventure, they will be lead by Daniel Shulman, the man that led American Expresses’ mobile online payment systems.
I wouldn’t worry about PayPal. In the past year, PayPal has processed over $203 billion worth of online payments. They even have debit cards strictly backed by your PayPal account. Who would have predicted that back in 2002? But I wonder is it wise to choose an outsider to lead PayPal in this new world. Wouldn’t it be better to bring a PayPal executive to take this role? Now what about Ebay? They’re certainly not the only candy store in town anymore. While they’re still the top online auction site, they have plenty of competitors: Webstore, eBid and Onlineauction.com are just to name a few. Can Ebay keep her crown after this split?