By Rachel Konrad
Associated Press
Saturday, June 23, 2007

After a spat between two of the world's largest Internet companies, online auctioneer eBay said yesterday that it would resume advertising with Google.

EBay pulled ads from the world's most popular search engine June 11 in what the auction company billed as an experiment to determine the most effective means of getting customers to visit the shopping site.

Instead, eBay -- one of the biggest users of Google's AdWords marketing program -- increased advertising on Google rivals, including Yahoo, Ask.com and Microsoft's MSN.

EBay spokesman Hani Durzy said the experiment proved that eBay didn't have to spend as much on Google ads, which generally run to the right of Google's regular search results. Durzy wouldn't provide figures but said eBay's pullback from AdWords in the United States would be "significant."

"Overall the takeaway for us was that we weren't as dependent on AdWords as some out there may have thought," he said.

A Google spokesman would not comment on eBay's return to AdWords.

EBay executives have insisted that pulling ads off Google was in the works for months, although the move coincided with a disagreement over a party Google planned at eBay's annual user party in Boston last week.

Google planned the event to promote its Google Checkout payment service, which competes with eBay's PayPal. EBay does not allow the use of Google Checkout on its site. Google canceled the event after eBay pulled its ads and eBay chief executive Margaret C. Whitman said she was "not pleased" with Google's party.

The incident highlights the complex relationship between two of Silicon Valley's most high-profile companies, which compete but also depend on each other for traffic and revenue.

PayPal, which eBay acquired in 2002, is the most popular online transaction service, with 143 million user accounts around the world. Google introduced Checkout last year, and the company said it is accepted by more than a quarter of the top 500 online retailers.

PayPal, which had $1.4 billion in revenue last year, is vital to eBay because it is growing faster than eBay's older auction and shopping business.