eBay and Google have a tense relationship. eBay is Google's single largest advertiser, buying keywords to drive traffic and purchases to eBay (EBAY) auctions. But Google (GOOG) is also eBay's biggest potential competitor, as consumers realize they can simply search for things to buy on Google instead of going directly to eBay.
With projects like Google Checkout aimed at online sellers, Google is trying to make further inroads into eBay's turf. Not surprisingly, eBay does not allow its sellers to use Google Checkout on its site. (And is plotting its own strike into search territory with its recent announced acquisition of StumbleUpon)
So when Google decided to throw a tongue-in-cheek freedom party in Boston and invited big sellers in town this week for an eBay convention to come check out its Checkout service, eBay pulled all of its ads from Google. And now Google has canceled its party.
The lesson here: Don't mess with a cornered animal.
Update: I'll be on CNBC talking about this with Paul Kedrosky at around 7:30 PM ET tonight. Let me know how I did.