Microsoft, eBay strike web services deal

In a bid to give its Internet auction site a boost, eBay last week unveiled a deal to adopt Microsoft's Web technology and .Net development tools.

Under the terms of the deal, eBay will use Microsoft's .Net tools and offer access to its commerce engine as an XML-based Web service. By deploying Microsoft's Web services, eBay plans to extend its reach to devices such as pagers, handheld computers and televisions, as well as to other novelty Web sites that hawk goods.

For example, a Web site for motorcycle enthusiasts could use Microsoft's Web services to tap into eBay's marketplace, instead of building its own commerce engine, said eBay CEO Meg Whitman.

The deal calls for Microsoft to carry eBay's auction listing on some of its Web sites, such as CarPoint, WebTV Networks Inc. and Microsoft bCentral, a small business site. EBay will also deploy Microsoft's Windows 2000 Server and the Passport online user authentication service.

"We will gain transaction-based revenue - listing fees and final value fees - as the eBay platform is extended to other parts of the Web," said Whitman. "In the distribution deal, we will gain new users who come to bid and ultimately become sellers."

Microsoft's .Net is a technology initiative that allows applications to swap functionality - in the form of Web services - with other applications on disparate platforms. Microsoft wants to showcase examples of the new technology at work as it delivers different parts of the initiative during the next year, said Microsoft CEO Steve Ballmer.

"We asked ourselves, 'What would be the one company that if it got behind .Net, it would be the most compelling because they're successful?' " said Ballmer. "And we said, 'eBay would be at the top of that list.' "Gaining high-profile examples to showcase the .Net technologies is critically important for Microsoft, said Daryl Plummer, an analyst at Gartner Group.

Microsoft has "to deliver the tools and get people using .Net, but not in an ad hoc fashion," said Plummer. "The other option is to sell to private companies, like eBay. Microsoft is taking a big step by getting a visible, successful Internet company and helping them to get to Microsoft-oriented Web services."

The relationship will build on eBay's application programming interface (API), which the company released last November to give developers a standard way to create applications that are integrated with its Web auction site.

The auction site uses Sun Microsystems Inc.'s servers for its back-end transaction processing. Those APIs will still be available and eBay will continue to use Sun's hardware, Whitman said.

Financial terms of the deal weren't disclosed.

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