I was just reading Erik Schonfeld’s post over at TechCrunch about Amazon supposedly preparing a PayPal killer. As he quite right points out though – Amazon already has a payment system in place. How it can make it any more PayPal like is up for grabs but that isn’t the intent of this post to figure it out.
What I do want to talk about and was in part prompted by Erik’s post is that one of the driving forces on the Internet; and business in general really, is the unquenchable need to expand a company’s size and product range. Sometimes these acquisitions make sense and everyone involved is a winner. The company doing the buying, the company being bought and in many cases the customers of those products from the now joined companies.
In other instances though this isn’t always the case. Sure the company doing the buying may think that the purchase might fulfill some strategic need and the company being bought is happy because they get to walk away with a shitload of money. The third part of the equation though – the customer – sometimes ends up being the loser as suddenly options that they might have had before the purchase are gone.
Nowhere is this any clearer than when eBay decided that it would be an incredibly smart business move to buy PayPal. After all the service was being used by a large majority of vendors and buyers in their auction service. So it made perfect sense for them to buy the company.
As smart as that move might have been for eBay, and as happy as the owners of PayPal would have been for such a nice payday it was – as time has proven – the users of the service that have gotten the short end of the stick. While PayPal is recognized as being the premier payment and money transfer system on the Internet the moment that eBay bought PayPal we instantly saw the marketplace hit a stone wall.
The reason for this is because eBay the parent company is considered to be one of the top web businesses around with more competitors for shopper dollars than just about anyone else. Where once places like Amazon, Apple or any other major business on the web selling products directly to consumers might have considered supporting PayPal as a payment method that option disappeared the moment the ink was drying on the eBay purchase agreement.
As I have pointed out many times here at WinExtra not everyone has credit cards, US based debit cards or even lives in the US but because of one company deciding that it wanted to corner the market on e-commerce payments we ended up being the losers. I’m not suggesting that it was given that companies like Amazon, Apple or even Microsoft would have added PayPal as one of the payment options for their products but chances were a lot more likely before eBay stepped in the picture.
The end result though, is that a larger percentage of potential customers with money to spend are now locked out of the marketplace. In my opinion this is one case where companies buying companies has proven to be a detriment to the web as a whole.
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