Google interoperates with Skype

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Tom Keating
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Google interoperates with Skype

The Google Talkabout blog announced Google's plans to interoperate with Skype. In part it states, "Google and eBay have signed an agreement around text-based advertising and "click-to-call" advertising, in which Google Talk and Skype will power voice calls between customers and merchants." Even more interesting is this tidbit from the official press release: "Google will become the exclusive text-based advertising provider for eBay outside the United States." Wow, this is a huge win for Skype/eBay, but I'm not so sure how much of a win this is for Google - more on that later.

It is interesting that there is a caveat in the press release - Google is the exclusive text-based advertising provider for eBay outside the United States. Apparently, as part of this deal, Skype/eBay can continue to use Overture or other ad networks within the U.S. but must use Google for advertising outside the U.S. This sounds to me like Skype/eBay negotiated hard with Google and threw Google a "bone" by agreeing to use Google exclusively outside the U.S.

According to their press release, eBay and Google plan to integrate and launch "click-to-call" advertising functionality that leverage both Skype and Google Talk in each company's respective shopping and search platforms. So if I go to Skype's online store, I can expect to see a Google Talk button instead of a Skype click-to-call button? Unlikely. It seems clear from the news announced that Google and Skype wish to give the user the option of which VoIP  click-to-call application you wish to use.

Skype buttonThus, perhaps Skype will modify their famous click-to-call buttons to include an image of both Skype and Google Talk on the same button. Then whichever is your default callto: application (Skype of Google Talk) will automatically be launched when the button is clicked.

The next question you are probably asking yourself is "Is it technically feasible for Skype, a proprietary P2P VoIP application to interoperate with Google Talk". The short answer is that is quite feasible. Aswath has a good run down explaining the technical feasability.

Soon, Skype will offer its users the option to download the Google Toolbar, to which Skype will add a custom button. There is no mention whether Google would add Skype to the Google Toolbar in return. This would be a huge win for Skype, but would also upset Google's fans that don't hate "bloatware". Of course, Google could offer a check box before downloading to include/exclude the Skype software.

So what's in this for Google? The New York Times states that mortgage brokers are willing to pay $8 to $15 for each call from a Web searcher, which is roughly 10 times more than they will pay for a Web site click. As part of the Google-eBay/Skype deal, money paid by advertisers for calls completed through Skype would be split between the two companies. Indeed, mortgage brokers are one such potential revenue source from click-to-call applications. However, there has to be a lot of trust between the customer and the mortgage broker. How many users, tech-savvy or otherwise, are willing to trust talking to a mortgage broker using Skype or Google Talk, especially when trying to broker a $350,000 deal? Even if the voice quality is superb, do you really want to deal with a mortgage broker whose identity is unknown due to the use of VoIP? There is a level of trust with dialing an 800/888/877 toll-free number that VoIP just hasn't earned yet. Especially with Spam over Internet Telephony (SPIT) concerns. Thus, I don't believe Google isn't going to make much "shared revenue" at all as part of this deal - at least in the short term, until some sort of "trusted VoIP source" program is instituted. People just aren't going to use click-to-call for $8-$15 click-to-call transactions. On the other hand, users might use click-to-call for ordering a pizza or some other "low-level trust transaction" - but these advertisers are probably only willing to pay $0.10/click - roughly the same as a regular advertising click. They might be willing to pay a bit more, but certainly not $8-$15/click. I can foresee the potential for massive fraud with this unless Skype/Google implement some complex billing auditing. They will need to at least track IP addresses and not charge advertisers for clicks resulting in any phone calls less than 2 minutes.

Of course, eBay through their acquisition of Paypal has their buyer protection program, which helps allieve some of the concerns over fraud. So perhaps eBay can extend their Paypal buying protection program to VoIP click-to-call advertisers. Perhaps they can "vet out" these advertisers and give the consumer a level of trust with VoIP that would not otherwise be there. That in essence is the what will give Google and eBay/Skype a future advantage in VoIP, if they play their cards right.

Andy disagrees with my position that this is an eBay/Skype win and thinks Google instead got the better part of the deal.
I agree with Russell Shaw's assertion that this deal is signalling modest plans for Google Talk.

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