Google, small businesses, and eBay

Fortune has an interview with Eric Schmidt (CEO of Google). It's interesting and worth reading.

One particular quote on helping small businesses caught my eye:

The longer term goal is to have businesses give us very timely local information. So, for example, they'll say we have too much of this or too much of that product, and we want to have a sale. The goal is to have the computers arrange that real time and send out targeted advertising to interested parties nearby.

Eric is saying that they want to help small businesses tell interested people about individual products.

Is this more than just targeted advertising? To me, it's starting to look like allowing merchants to use Google to sell their products.

What do I mean? Consider eBay for a moment. What is eBay really? It's classified advertising. Small merchants post advertisements for their products on eBay. Buyers come to eBay, find what they need, and close the sale, often using a non-eBay site for payment. eBay's business is essentially classified advertising.

Now, look back at what Eric Schmidt said. Google will help merchants target individual products to interested people. Advertising at this level of granularity is very similar to eBay's product. Using Froogle, AdWords, and AdSense, small merchants could sell their products through Google instead of eBay.

[via John Battelle and Gary Price]

Update: Three years later, a BusinessWeek article reports the eBay "magic is gone ... Shoppers are simply not buying all the inventory anymore. Some items languish without a single bidder. Many shoppers opt for other sites including Amazon.com, use sophisticated search engines such as Google and Yahoo!, or head to store sites directly."