By the London Technology Team
PayPal: Buy It Now?
This week saw the significant news that e-commerce giant eBay is to split into two, separating its online payment service PayPal into a company of its own. PayPal, acquired by eBay for $1.5 billion in 2002, is currently experiencing encouraging growth, with annual revenue up 19% to $7.2 billion, almost double the growth rate of eBay itself (up 10% to $9.9billion). Analysts believe that there are a number of reasons behind the announcement, including: pressure from shareholders, the opportunity to unlock extra value in both companies, a difference in priorities for both companies and the need to stay ahead of the ever-increasing competition with which PayPal is faced.
This last point was explored in depth in a thought-provoking article by Sarah McBride and Deepa Seetharaman for Reuters. In their piece, McBride and Seetharaman explain how a number of senior PayPal figures have left the company in recent years to establish services, such as ‘Stripe’ and ‘Affirm’, targeted at those who use their mobile phones rather than desktops to make online payments, stressing that PayPal has much work to do to keep up with their competitors in this innovative environment.
Digital Magna Carta: Holy Grail?
Accepting an honorary freedom of the City of London last week, the creator of the World Wide Web, Sir Tim Berners-Lee, warned that “suddenly the power to abuse the open internet has become so tempting both for government and big companies”. Berners-Lee did not name and shame but used the 25th anniversary of the Web’s creation to propose the creation of a digital Magna Carta to protect basic web rights. He also criticised internet service providers that wish to give preferential treatment to higher-paying corporate customers – therefore breaking the convention on “net neutrality”, something he described as a “pre-requisite for the life that we’ve had over the last 25 years and for a healthy life as we go on”. Berners-Lee said he hoped that in the future children would be taught about the importance of an independent World Wide Web. In an interview with the Evening Standard, he welcomed the current backlash which has seen growing public concern with the power of internet and tech companies. You can read excellent summaries of this story by The Times, The Telegraph and an interview with Sir Tim in The Evening Standard.
Sir Tim is currently the Director of the World Wide Web Consortium (W3C) an international community which works together to develop Web standards. He is also the Founding Director of the World Wide Web Foundation which is committed to the improvement and availability of the World Wide Web. This year marks the 25th anniversary of 25th anniversary of the World Wide Web, which Berners-Lee invented in 1989 at a CERN research facility in Switzerland.
This week we witnessed the birth of Atlas. The launch of Facebook’s new online advertising service inspired a rash of headlines portraying Facebook as a data-sucking, digital stalker. If Facebook’s marketing team subscribe to the old adage that there is no such thing as bad publicity then they will undoubtedly be delighted with their week’s work. Zoom-out; look passed the fear-inducing headlines and you are left with a striking example of achieving wide coverage from a simple product launch. However, as product launches go, it was a rather important one and Atlas could have significant ramifications for data privacy and the future of advertising. Many have focused on the rise of “people-based marketing” and countless column inches have been devoted to the data privacy concerns associated with Atlas, with particularly insightful accounts coming from The Verge, The New York Times and Slate.
Of particular interest has been the extent to which Atlas has divided opinion. For instance, whilst some fear this latest step in the development of targeted advertising, others have welcomed it with open arms. Either way, the commercial back-drop to Atlas is fascinating. Facebook acquired Atlas from Microsoft (who had given up on it) early last year for an undisclosed fee in the region of $50m, a relative steal for the Silicon Valley giant. Atlas was acquired in order to help advertisers “close the loop” between ad spend and associated revenue increases.
At the time of the acquisition, Facebook’s Director of Product Marketing articulated their plans to make “…Atlas the most effective, intuitive, and powerful ad serving, management and measurement platform in the industry”. Time will tell if this goal has been achieved but it is already clear that Atlas represents a major threat to Google’s lucrative AdWords offering. Facebook are hoping that a greater focus on mobile marketing will give them an edge. Will Atlas leverage Facebook’s unparalleled personal data stores and dominate online advertising for years to come? Who knows, but as any advertiser would tell you, ‘Watch this space’.