Will Google's Gbuy Go Toe to Toe With Neteller?
13 June 2006
The Motley Fool
How Evil Will Google Become?
By Tim Beyers (TMF Mile High)
June 13, 2006
Maybe I’ve still got evil on the brain. A week after the rerelease of The Omen on the so-called day of the devil — you know, 6/6/2006 — I’m wondering when Google (Nasdaq: GOOG) will finally give in to its darker side.
June 28 may offer another temptation. That’s the date an RBC Capital Markets analyst says the search king will launch Gbuy, an online payments service similar to eBay’s (Nasdaq: EBAY) PayPal. The fear is that, with Gbuy, Google could get unprecedented knowledge of what we buy and where we buy from, which would then allow it to charge huge premiums for its most effective advertising tools.
That’s a legit concern, to be sure, but it’s not why I’m writing today. Instead, I wonder whether the Big Goo, as Foolish friend Seth Jayson calls it, will embrace another kind of evil: Internet gambling.
The answer matters more than you might think. PayPal, you see, doesn’t accept payments from gambling sites. And that leaves millions of potential customers to other providers, including Neteller, a Pink Sheets-traded company.
Neteller is like PayPal in most respects, except that the London-based company specializes in processing online gaming payments. Poker sites such as PokerStars and PartyGaming’s Party Poker offer good examples. And it’s a big business — Neteller processed more than $7.3 billion U.S. in transactions during 2005. That’s a lot of, um, evil.
Can Google afford to ignore it? Calls to Google PR requesting comment were not returned by press time. Nevertheless, the company may not have much of a choice, at least here in the U.S. Congressman Bob Goodlatte, a Republican from Virginia, has introduced a bill in the House that would, if passed, ban money transfers for most forms of online gambling, including poker.
Still, any meaningful legislation could be months or years away. Meanwhile, PayPal remains the heavy in U.S. online payments processing, handling $9 billion worth of transactions in the first quarter. Reducing that edge won’t be easy. History says that Big Goo’s strategy will be to zig as PayPal zags, hoping to drag consumers along for the ride. And that makes sense. Too bad there aren’t many ways to do online payments differently. Unless, of course, Google decides evil isn’t evil after all.