Back in the mid 1990s I was trumpeting this little company called AuctionWeb - a place where people could go on this new thing called the “internet” to buy or sell any number of different goods. While we were writing about it, some other people were investing small sums of money in it, which eventually turned into billion dollar equity stakes in an online behemoth now known as eBay. While it was nice to be proven right, there might still be a little regret over not getting in on the ground floor.

Since then eBay has had some ups and downs, with various people questioning the logic behind multi billion dollar acquisitions of companies like PayPal and Skype. But through it all, the core auction site and the powerful network effects built into it have remained an almost unassailable growth and profit making machine. 

Now eBay, under the guidance of new “Senior Director of platform and innovation” Max Mancini, is looking to improve on this cash generating machine through something they’re calling social commerce. While it could still evolve in a number of ways, the key idea is integrating the emerging relationship and trust measurement tools of social networking sites directly into the transactional relationships and trust metrics currently employed by eBay to facilitate commerce. Or in the words of Mancini himself:

Our feedback system is based on transactions, as opposed to determining whether I can trust this person through some other relationship other than a transaction. We need to stay on top of this trend.

So could an acquisition of a company like LinkedIn be in eBay’s future plans? At least one blogger is speculating that it could be in the cards, and given eBay’s history of buying up assorted companies (in addition to PayPal and Skype, stakes have been taken in Craigslist.org, Rent.com, Shopping.com, Stubhub.com, and a variety others) it really wouldn’t come as a surprise. But whether they do or not, the key message is that social networking is already starting to transform how business operates - a trend that no company can afford to ignore.

Don Tapscott

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