Two days ago I gave you a list of 10 reasons I thought Microsoft would never buy Yahoo. Number 5 on that list said that, should Yahoo get bought, eBay would be a much more likely purchaser than Microsoft.  eBay's auction sales are starting to stagnate.  They're going to need a pretty potent injection of business before too long.  Yahoo could offer that injectable business at the same time that it expanded eBay's role beyond the realm of online auctioneer.  But there's another reason eBay might be interested in a Yahoo purchase.

eBay might have to buy Yahoo to compete with Google's fairly new Checkout service.

The web has been abuzz with news about the incentives Google has been offering to both merchants and customers this holiday season.  Customers are getting discounts for making purchases and merchants aren't being charged transaction fees through 2007.  For busy websites, that translates into a lot of money saved.  And, as The New York Times points out, Google is taking a hit on all the incentives.  But merchants love the savings and merchants are the ones filling Google's checkbook with ad dollars.

Checkout is part of a bigger Google strategy to drive more advertisers to its AdWords platform.  Google Checkout participants get featured logos put on their ads.  Those logos, in turn, have a tendency to draw more attention (and thus, more clicks) from consumers.  Google makes money on the click and the merchants make more money on more sales from the increased traffic.  The deal gives merchants more incentives to invest heavily in AdWords and it works out nicely for Google, too.

PayPal, a competing service and an eBay company, still has the lead in online transaction processing.  With millions of merchants using the service (as opposed to Google's thousands) and millions of users, PayPal still rules the online transaction processing world.  In fact, both services continue to attract more customers.  But in time, the Google + AdWords association may make Google Checkout more of a threat to PayPal than we think.

Not everyone agrees.  Business 2.0 Beta doesn't think Google Checkout is any competition to PayPal because of the nature of the transactions each service deals with.  While Google Checkout is restricted to credit and debit card transactions (which are notoriously unprofitable), PayPal handles direct person-to-person transactions as well as credit and debit.  PayPal's profits come from those person-to-person transactions.

If Google Checkout remains a strictly card-based payment service, Business 2.0 Beta might be right.  But who's to say they will?  Google is famous for rolling out products with a base set of features only to slowly expand and enhance the service over the following months.  Google could announce tomorrow that direct money transfers had been added to Checkout and we'd never have seen it coming.  I think it's a little to early to start calling this one.  I have a sneaking suspicion that we haven't seen every trick in the Google hat yet.

If Google does become more of a direct competitor to PayPal, Yahoo could start looking more and more like a valuable asset for eBay to acquire.  The Checkout + AdWords combo could really only be taken on in the long term with a PayPal + advertising combo of eBay's.  There's a lot more money in search advertising than auction advertising.  Yahoo's search customers and advertising customers could fill in the gap in eBay's game plan rather nicely.

All of the sudden, Yahoo is looking less and less like a future Microsoft acquisition… and more like the future YahooBay.