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On Wednesday, Google announced that it was making its new payment service, Google Checkout, free for merchants through the end of the year. Upon hearing this news, some commentators jumped to the usual Google conclusion: another brilliant move by an infallible company that will soon put Microsoft, Yahoo, and eBay out of business. But is this really the right conclusion?

Last summer, you may remember, when Checkout was finally announced (after months of rumors, speculation, and denials that reduced eBay/PayPal shareholders to quivering jello), analysts almost universally concluded that the AdWords/Checkout combination was so potent that PayPal was toast. Yesterday, while suggesting that the PayPal obituaries were a bit premature, the WSJ noted that Google Checkout had signed up "a few hundred merchants."

A few hundred? Unless that number is at least two orders of magnitude too low, the reason Google is making Checkout free is not that it wants to finish eviscerating PayPal, but that Checkout has been an unqualified disaster. Google has hundreds of thousands of advertisers, the majority of which have web sites that could presumably benefit from Checkout.

Can it really be true that, six months after the PayPal killer was announced, Google has only managed to persuade "hundreds" of these advertisers to try the service?

I don't know the answer--I'm hoping some of you do.

Source: Google Checkout May Be a Dud