Tit for Tat: The Google-eBay Pillow Fight
(photo by Steve McFarland)
In its recent article Google-eBay Kiss and Make Up after Ad Spat AP reported that eBay resumed running its Google ads after pulling them in apparent retaliation for Google's plan "to siphon attention from eBay’s annual user celebration in Boston."
In the past week, eBay — one of the biggest buyers using Google’s AdWords marketing program — increased advertising on Google rivals, including Yahoo Inc. . . . EBay executives have insisted that pulling ads off Google was in the works for months, but the move came just as Google was planning “Let Freedom Ring” — a reference to the fact that San Jose-based eBay, which owns transaction service PayPal, does not allow rival Google Checkout as a payment method.
(for the economic details on the collaboration and competition between these two internet giants, see Search Engine Land's post eBay Ads Still Off Google).
To effectively respond to competitive negotiation tactics and encourage cooperative bargaining, we are advised:
1. never be the first to make a competitive move
2. retaliate only after your bargaining partner has responded to a cooperative gesture with a competitive one.
3. be prepared to forgive after carrying out just one act of retaliation
4. adopt this strategy only if the probability of meeting the same player again exceeds 2/3 (remembering that it is a long life and a small world).
From news reports, it appears as if eBay made the first competitive move by preventing its customers from using Google CheckOut (as opposed to eBay's PayPal) to purchase goods on eBay's site.
Though denying any competitive motive, Google's "Let Freedom Ring" gala would have siphoned attention from eBay’s annual user celebration in Boston. It was clearly retaliatory.
eBay met retaliation with retaliation (and then some) by withdrawing its advertising from Google’s AdWords and increasing its advertising on Google rivals, including Yahoo Inc., IAC/InterActiveCorp.’s Ask.com and Microsoft Corp.’s MSN.com. Though this greatly escalated the conflict, eBay publicly "spun" its withdrawal as an "experiment" to learn how dependent its business was on Google's ads.
Google responded forgivingly, cancelling its competing gala, in response to which eBay also quickly forgave past sins, resuming its advertising program with Google.
Initiating Collaboration and Reiprocity in a Hostile Competitive Environment
The Google/eBay spat was classic tit for tat. Victory went to the initial aggressor despite rule 1 - never be the first to compete -- without apparently damaging the existing collaboration between the parties because both forgave (rule no. 3) and helped one another save "face."
Assuming you want to encourage collaboration and reciprocity in a competitive environment, how do you do it?
The experts advise that where, as here, the players continue to have mutually beneficial interdependent commercial interests
co-operation based on reciprocity can indeed get started in an asocial world, can flourish in a variegated environment and can defend itself once fully established. . . Tit for tat [can be] successful . . . because it is 'nice', 'provokable' and 'forgiving'. A nice strategy is one [in] which [neither bargaining partner] is []ever first to [compete]. In a match between two nice strategies, both do well.
A provokable strategy responds by [retaliating] at once in response to [competition]. A forgiving strategy is one which readily returns to co-operation if its opponent does so; unforgiving strategies are likely to produce isolation and end co-operative encounters.
This strategy describes to a "t" the conclusion of the Google-eBay high-stakes game of tit-for-tat. Although eBay continues to prohibit its customers from using Google's "Check Out" to pay for their purchases, the "tit for tat" struggle that followed did not end in stalemate because both parties were hard on the issues, easy on the [corporate] people and forgiving.
After eBay delivered its sharp slap to Google's wrist by pulling all of its advertising from AdWords, Google surrendered by cancelling its gala, in response to which eBay "forgave" Google and returned to the AdWords program.
Note that both parties were able to have this quite public competition without either side losing "face" as both continued to deny (implausibly or not) that the competition was taking place.
Assuming Google and eBay had continued to escalate their "spat" rather than finding a way to end it, the matter could easily have ended in stalemate.
How to End Stalemate
Because we've all experienced stalemated negotiations and have often been unable to re-open them, I leave you with Professor John Wade's 17 Strategies for Re-Opening Hopelessly Deadlocked Negotiations.
- Back channel contacts
- Use of intermediaries
- Giving conciliatory signals
- Superordinate goals
- Expressing vigorous “no surrender” on interests
- Willingness to discuss procedure
- Admitting flexibility on specific solutions
- Refusing to make any unilateral concessions
- Identification of division between hawks and doves
- Acknowledgement of other’s interests
- Mild threats or consequences
- Clear rejection of unacceptable past solutions
- Assembly of an expert problem solving team
- Rewarding others for any helpful initiatives
- Keeping communication open
- Prioritising of interests
- Filing a formal claim
