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Google-eBay merger could pose challenge to tech start-ups

Colorado is known for a lot of different reasons: friendly people, good beer and mountains to name a few. While it may not be first on the list, Colorado is also known for its growing tech industry. In fact, in 2012 the tech industry in Colorado employed more than 160,000 individuals, making it number three nationally in terms of tech work concentration. Because of this, it may be likely that Colorado businesses have been following the news about a potential Google merger and acquisitions of eBay closely.

Over the last few weeks there has been a lot of discussion about why a merger between Google and eBay might be a good move. The main reason is Alibaba, a Chinese e-commerce company expected to go public soon, a move that will result in a huge cash infusion for the company. At the moment, Google is struggling to compete in the world of e-commerce, a strong niche of Alibaba, while eBay is facing challenges to spin off PayPal. As a result, both companies face the presence of competition from the Chinese company.

Some analysts suggest the Google merger and acquisition of eBay would represent the best of both worlds for the companies. If such a merger occurred, eBay might be able to cool off requests to spin off PayPal while providing extra value to investors, and Google could bring new energy to its e-commerce division. In the end, however, while the merger could provide a serious benefit to the two tech giants, it will also have the result of making things that much more difficult for small companies trying to compete.

There are many reasons for mergers and acquisitions, from outside competition to obtaining an immediate cash infusion. With so much on at stake, if a tech start up is faced with an offer for acquisition, it is important to consult a professional to understand the full implications of acquisition before making a decision to sell.

Source: Silicon Valley Business Journal, “Google-eBay merger? It may not be as crazy as it sounds,” Sarah Drake, March 18, 2014


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