Changes made by Google Inc (NASDAQ:GOOGL) to its algorithms have contributed to the troubles of eBay Inc (NASDAQ:EBAY), Mark Mahaney said in a discussion about the technology companies on Bloomberg West.
According to the RBC Capital Markets Managing Director, eBay Inc (NASDAQ:EBAY) sees a significant part of their traffic coming from Google searches and people seeing particular items they are looking for in the paid and organic search results. Google Inc (NASDAQ:GOOGL) changing the way their search engine works has consequently dealt a blow to the electronic commerce giant’s traffic.
“Anybody who’s dependent on Google for a lot of traffic, when Google makes those tweaks and they are continuous tweaks and Google views your sources as lower quality, then you’re going to get less traffic. The Google machine out there, the ultimate arbiter of what’s good and bad on the Internet, has essentially said that some of these eBay links weren’t high quality,” Mahaney said.
Nonetheless, eBay Inc (NASDAQ:EBAY) is not doomed even if Google Inc (NASDAQ:GOOGL) has made changes to its search.
“This is something that they are adjusting to. In the meantime, they have to spend more money on other marketing channels. Maybe they start putting more money onto Facebook, maybe on Twitter, other sites like that, email marketing, outbound marketing. There’s a lot of things they can do to offset that. They’re going through that process now,” Mahaney added.
Nonetheless, even if eBay Inc (NASDAQ:EBAY) can offset its loss of traffic because of any Google Inc (NASDAQ:GOOGL) change, Mahaney also said that the company’s fundamentals appear to be deteriorating and the company’s stock is just working off of the public’s interest in corporate catalyst with the pending spinoff of the PayPal division.
John Griffin’s Blue Ridge Capital owned 394,000 Google Inc (NASDAQ:GOOG) Class C shares by the end of the third quarter of 2014. Also by the end of that quarter, Barry Rosenstein’s Jana Partners owned about 13.06 million eBay Inc (NASDAQ:EBAY) shares.