After eBay pulls ads, Google pulls plug on offending party

IDG News Service - A contrite Google Inc. canceled a party that irked eBay Inc. and -- according to a source -- prompted the online auction firm to remove all of its ads from Google's U.S. network earlier this week.

On Monday, Google announced it would throw a party in Boston on Thursday evening designed to attract eBay merchants who would be in town to attend the eBay Live annual seller conference.

The purpose of the party: protesting eBay's decision to forbid merchants in its marketplace from using Google's Checkout online transaction system.

EBay found Google's move to be in bad taste and, at some point after the party was announced, took the drastic measure of pulling all of its ads from Google's AdWords U.S. network.

A source familiar with the situation said that eBay's decision to turn off the ads had come from the company's top executives who were steaming over what they perceived as a low blow by Google designed to embarrass eBay in front of its top merchants.

It would be hard to disagree with eBay executives' assessment, considering the mocking tone of Google's party announcement , encouraging eBay merchants to gather at the Old South Meeting House, where in 1773 mass protest meetings were held, leading to the Boston Tea Party.

"We¿ll use the same spot where revolutionaries launched the Boston Tea Party to celebrate freedom with free food, free drinks, free live music -- even free massages," the official blog posting reads.

Then, this afternoon, Google unexpectedly canceled the party after its officials apparently determined they had gone too far.

"EBay Live attendees have plenty of activities to keep them busy this week in Boston, and we did not want to detract from that activity. After speaking with officials at eBay, we at Google agreed that it was better for us not to feature this event during the eBay Live conference," said a posting on that same blog.

EBay, which had earlier blasted Google for the planned party, said it was pleased with Google's decision. "It¿s reassuring to see that Google recognizes that their actions were inappropriate. We¿re pleased that our partner chose to do the right thing and cancel their event," eBay said in a statement.

However, eBay is keeping its ads off AdWords, eBay spokesman Hani Durzy said. EBay Live begins tomorrow in Boston.

The spat is yet another sign of what many consider a significant deterioration of relations between the two Internet giants in recent years, as Google has become a partial competitor to eBay.

Earlier today, Durzy said the decision to pull the ads wasn't related to the party and characterized it as an ordinary experiment by eBay, similar to others the company constantly does to determine the best allocation of its advertising and marketing budget.