Under pressure from eBay, Google has cancelled a party in Boston aimed at eBay merchants in town to attend the eBay Live annual seller conference.

Google intended to hold the party to protest against eBay's decision to ban merchants in eBay's marketplace from using Google Checkout - Google's online-transaction system.

At the centre of this week's confrontation is Google's Checkout online transaction system, introduced about a year ago and so far banned from the eBay sites. eBay argues Checkout doesn't have enough of a track record yet, while Google charges eBay with trying to protect its own PayPal online payment system. In addition to Checkout, Google has been entering eBay territory with other products like its Base listings service.

eBay took Google's Boston Tea Party move to be in bad taste and. Shortly after Google's event was announced, eBay pulled all of its adverts from Google's US AdWords network.

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Sources close to eBay said the decision to turn off the Google ads had come from eBay's top executives. The said eBay's top brass were steaming over this perceived 'low blow' by Google, designed to embarrass eBay in front of its top merchants.

Google had encouraged eBay merchants to gather at the Old South Meeting House, where in 1773 mass protest meetings were held, leading to the Boston Tea Party.

"We'll use the same spot where revolutionaries launched the Boston Tea Party to celebrate freedom with free food, free drinks, free live music - even free massages," Google's official blog posting about the eBay party reads.

Yesterday Google unexpectedly cancelled the party.

"eBay Live attendees have plenty of activities to keep them busy this week in Boston, and we did not want to detract from that activity.

"After speaking with officials at eBay, we at Google agreed that it was better for us not to feature this event during the eBay Live conference," reads a posting on that same blog.

eBay, which had earlier blasted Google for the planned party, said it was pleased with Google's decision.

"It's reassuring to see that Google recognises that their actions were inappropriate. We're pleased that our partner chose to do the right thing and cancel their event," eBay said in a statement.

However, eBay is keeping its ads off AdWords, eBay spokesman Hani Durzy said. eBay Live begins today in Boston.

Roots of the spat: next page >>