EBay’s John Donahoe Talks PayPal Spin-Off, Mobile Pay

EBay's John Donahoe. (Photo: David Paul Morris, Bloomberg)
EBay’s John Donahoe.
(Photo: David Paul Morris, Bloomberg)

After it becomes official during the second half of 2015, eBay and PayPal will become separate independent companies. EBay CEO John Donahoe spoke to USA TODAY’s Edward C. Baig about his motivations for the deal. Comments were edited for space and clarity.

USA TODAY: The deal you announced today was something (activist investor) Carl Icahn had wanted to happen earlier this year. Why did you announce it now? Were you influenced by Alibaba’s huge IPO and/or Apple’s introduction of Apple Pay?

Donahoe: We made this decision as part of our annual planning process. The first half of the year we do our assessment and analysis and gather the perspectives on what the future of technology is going to be, what the future of competition will be, what the future of the markets will be. With that three- to five-year time horizon, we look at our strategic alternatives and our options.

This year, we saw that the pace of change in the competitive landscape for both payments and commerce was accelerating in a very exciting way. In the context of that, we believe that we can best position eBay and PayPal as independent companies. Which would give them greater focus, greater flexibility and greater ability to move quickly. And felt that we could achieve the benefits of the synergies through arms-length commercial agreements. We made that decision over the summer. I would say the recent announcements that you just highlighted are simply just evidence of the competitive markets. We made the decision before any of those occurred but are just evidence of the fast-moving and very exciting change that’s happening in the market and that we think creates great opportunity for eBay and PayPal.

USA TODAY: What is the specific impact on PayPal?

Donahoe: We have a good history in mobile payments. Last year, we did $27 billion of mobile payments. Earlier this year, we processed our one-billionth mobile payment. So we have hundreds of millions of people doing literally billions of mobile transactions and a lot of experience there. And I view the recent announcements as exciting because I think it’s going to increase the awareness of mobile payments. I think that’s fundamentally a good thing for PayPal. And part of our explicit strategy is to be able to be present where the consumer is. Consumers can buy what they want, when they want it, and we want PayPal to be present on all mobile operating systems as we are today and all the merchants.

USA TODAY: Where does your acquisition of payments company Braintree fit in?

Donahoe: Braintree extends PayPal into a variety of new mobile-payment situations —like the sharing economy. It extends PayPal into apps like Uber or AirbnB. It’s a perfect illustration of what I was just describing, which is technology is enabling mobile payments to happen in more and more situations and more and more places, and we want to be at the very center of that.

USA TODAY: How do you view Apple?

Donahoe: I think of them as a potential partner. Obviously our mobile apps have been big players in Apple’s iOS app system. The eBay mobile app, which did $20 billion of volume last year, a good portion on Apple devices. We are always looking for ways to work with them.

USA TODAY: As a separate company, might PayPal partner with Amazon.com or Alibaba?

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