With Checkout, Google is ready to take your order

Its new online payment system draws little flak from privacy advocates. Do people really trust Google that much?

In 1999, Microsoft caused a tech industry ruckus when it introduced Passport, an online wallet and payment system that would allow shoppers to use one sign-in username and password to buy things from multiple retailers.

Privacy advocates fretted, a group of companies banded together to form a rival effort, and Microsoft Passport was scaled back after merchants failed to sign up.

Last week, Google introduced Google Checkout , an online checkout system that lets people make purchases from participating merchants using a single sign-in system. Google gives its AdWords paid search customers a discount to use the service. An icon on their ads tells shoppers they can make a fast purchase from that store.

It's a similar idea, but a different company, different time and no privacy hubbub--at least not yet. It begs the obvious question: Does the world really trust Google--the company with the "Do no evil" motto--that much more than Microsoft, the company sued by the Justice Department on antitrust grounds?

To answer the question, experts point to both the contentious period in which Microsoft launched Passport and noticeable differences in the companies' technology implementations.

"There was a lot of hullabaloo about Passport from the Electronic Privacy Information Center and others" when Microsoft introduced Passport , said Greg DeMichillie, a senior analyst at Directions on Microsoft. "A lot of that was focused on Microsoft's integration (of Passport) with Windows XP ."

"It was also coming in 2001 when the Justice Department (antitrust) case was still going on against Microsoft," he said.

Passport also suffered from some security glitches and experts complained that Passport lacked adequate security protections .

In response to Passport, Sun Microsystems and others launched the Liberty Alliance in 2001 as a competing "digital identity" effort. Importantly, it was not controlled by one company.

When it came down to it, consumers didn't want to be forced to use Passport and companies didn't want Microsoft to be in control of the customer information, analysts said.

"There is a greater level of trust with Google."
--Charlene Li, analyst, Forrester Research

Passport initially attracted some big-name merchants, including Monster.com and eBay. But by 2005 they were gone . Passport was scaled back and now offers single sign-on for Microsoft services only. It lives on in Windows Live ID, which is part of Microsoft's latest effort to focus on Web-based services and software.

Microsoft representatives declined to be interviewed for this article.

Compare that with Google Checkout's reception so far. Privacy groups, who were quick to assail Google's contextual-based targeted ads in Gmail two years ago , have been silent. And Google already boasts a roster of affiliate merchants, including Levi Strauss, Buy.com, Ace Hardware and Starbucks.

Checkout versus Passport
So what's the difference?

"People are not required to use Google Checkout, whereas Passport was the primary payment system" for Microsoft affiliates, said Charlene Li, an analyst at Forrester Research. "It was clear that Microsoft wanted to be the only registration and shopping wallet on the merchant sites."

Google Checkout merchants, meanwhile, can offer other checkout systems if they choose.

"There is a greater level of trust with Google," Li said.

Google also has a built-in merchant base in its hundreds of thousands of AdWords customers, something Microsoft didn't have at the time.

"Google already has a relationship with these Web sites with AdWords," said DeMichillie of Directions on Microsoft. "Microsoft was coming in cold...They really ran into a wall trying to convince third parties that it was worth doing."

Of course, Microsoft wasn't the only company to have a false start with a payment service. Yahoo, Google's chief rival in search, scrapped its PayDirect payment service for its online auctions in 2004. The company still has an online checkout system called Yahoo Wallet, which is limited to people buying Yahoo premium services and products from Yahoo's small-business merchants.

Yahoo also has teamed with eBay's PayPal and will likely integrate the popular PayPal payment system into Yahoo services, a Yahoo spokeswoman said.

But Google Checkout isn't in the clear just yet, said a Liberty Alliance representative.

"Some sophisticated technologists are concerned about the volume of information that could be aggregated here (in Google Checkout)," said Roger Sullivan, vice president of the Liberty Alliance Management Board and vice president of business development for Oracle's identity management solutions. "But that is mitigated by the fact that users are becoming more savvy about the level of information they will disclose."

The Liberty Alliance would welcome Google's participation in the group, he said. It was unclear whether Google would consider working with the group.

"Anything that advances the idea of authenticated and secure users...and advances the visibility and recognition in the industry is a good thing," Sullivan said.

Google may still run into some of the opposition from merchants that led to Passport's downfall, said Li of Forrester.

"Part of me says some big merchants will be concerned about Google capturing that customer data, but some may be willing to give it up to get better conversion (to sales)," she said. "In the end, money talks and if Google checkout can make them more money, they'll use it."

 

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