eBay has pulled all its advertising from Google after learning of the search giant’s plan to gatecrash its user conference this week to promote Checkout, a rival to eBay’s PayPal payment service.

The online auction site, which is Google’s biggest advertiser by far, cancelled the adverts indefinitely after the search engine invited eBay’s largest sellers, in Boston for their annual convention, to a rival party.

Once at the party, which was scheduled for last night, Google planned to extol the virtues of its fledgeling Checkout online payment service.

But in a move that will give satisfaction to the growing army of Google-haters, the search firm cancelled the event on Wednesday night after eBay announced that it would cease advertising with the search engine.

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The advertising debacle happened less than a month after Microsoft branded Google’s planned $3.1 billion (£1.6 billion) takeover of DoubleClick, the online advertising firm, as uncompetitive. Microsoft had made its own offer for DoubleClick, but lost out to Google.

Roger Kay, president of End-point Technologies, the US consultancy, said: “Google is the king of the hill and it is a natural human emotion to wish for the downfall of such a dominant company. The mantel has shifted from Microsoft to Google.”

After Google spent nearly $1.7 billion on YouTube, the video-sharing upstart, media companies such as Viacom, the owner of MTV, began to step up copyright infringement claims relating to the site. They had been largely ignored when it was owned by a bunch of former students.

Mr Kay said: “Google’s move seems mean spirited and underhand and I am surprised it stooped so low. But I’m glad eBay stood up to Google, although I don’t think eBay really needs to worry. Check-point isn’t doing that well and PayPal is the dominant method.”

eBay, whose PayPal services handle about 80 per cent of American internet transactions, spends an estimated $100 million a year advertising with Google. Some 188 million eBay ads appeared on Google in March, more than double the number for Target, the department store chain that is the search engine’s second biggest advertiser, according to com-Score Networks.

Analysts estimate that between 10 per cent and 20 per cent of eBay users are led to the site by Google adverts. But PayPal generated $1.4 billion of revenues last year, nearly a quarter of the group’s total sales, and eBay is concerned that rival systems such as Checkout could erode that business.

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