Are eBay and PayPal heading for divorce?
eBay considering a PayPal spin off is once again hitting the news. After four short months since eBay pacified Carl Ichan by giving him a seat at the table, the rumour mills are churning about a separation of marketplace and payments.
Donahue has been adamant that PayPal is better off with eBay saying that there’s a convergence of payments and commerce, not a separation – not just for eBay but across all markets. However rumours started by The Information say that eBay are telling possible recruits (to replace recently departed David Marcus as PayPal President) that a spin off could be a possibility.
We’ve not bothered to ring up eBay/PayPal to ask for a comment, mainly because we know the answer will almost certainly be a “no comment”. However there are only three possibilities:
1) eBay and PayPal stay together
This will delight John Donohoe and upset investors who believe they’ll get better returns with the two as separate entities.
2) PayPal is spun off
This will delight investors but leave John Donohoe in the somewhat invidious position of back pedaling fast to explain why he now thinks the companies should split. At worst it could topple him from his position as CEO and at best an explanation about how the time is now right would fudge over the issue.
3) It’s all marketing spin for the incoming President
Devin Wenig became President of eBay he split the marketplaces business off from eBay Inc announcing “This is the new eBay” with a new logo and new identity. Perhaps the same will happen with PayPal and prospective PayPal Presidents are simply being told they’ll have the ability to run PayPal as an autonomous company albeit still within the eBay Inc corporate group.
That’s an attractive proposition, just as Devin Wenig was given free rein to ignore Payments, Classifieds, Magento, Stubhub and other peripheral companies and do what’s best for eBay Marketplaces, perhaps the new PayPal president will have the freedom to simply do what’s best for PayPal without having to constantly defer to the marketplace requirements.
We’ll find out soon enough… my money is on the “even eBay themselves don’t know yet” option, but when they know we’ll let you know. Investors seem pretty positive though, eBay’s share price has jumped.