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PayPal spinoff from eBay is 'natural,' co-founder says

PayPal co-founder Peter Thiel says it makes sense for eBay to split from the online payments service. Now, PayPal will need to focus on making its product more competitive in a mobile world.

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PayPal co-founder Peter Thiel said he wasn't surprised by eBay's decision to split off the payments service. SXSW/YouTube screenshot by Chris Matyszczyk/CNET

PayPal co-founder Peter Thiel thinks the online payments service is all grown-up, making eBay's move to spin off the company a natural course of action.

Thiel seemed supportive of eBay's announcement Tuesday, saying it used to make sense to have the two companies combined but times have changed. He's not surprised eBay was evaluating whether or not they were still a good fit. PayPal's growth has taken it far beyond the payment of choice in eBay's marketplace.

"As these business have diverged, it's natural to ask these kinds of questions," Thiel said during an interview with KQED.

eBay's move comes at a time when the payments space is rapidly changing, with new competitors coming online frequently. In recent years, PayPal has had to change its services to adapt to the nimble world of mobile payments, and many analysts say splitting the company off from eBay will help it move faster. PayPal's most recent challenge comes from Apple's mobile payment service, Apple Pay , which is expected to launch next month.

"The claim would be you'd have one company focusing on payments, one company focusing on e-commerce," Thiel said. "It's often hard to have multiple centers."

Thiel, who co-founded PayPal in 1999 before selling it to eBay in 2002 for $1.5 billion, said "focusing on the product will be critical to PayPal's success."

In the past, he spoke out against the split, namely during activist investor Carl Icahn's campaign to separate the companies. Thiel told Forbes in February that it was not the right time for the companies to split up and that he was "viscerally against" Icahn's actions in general.

When asked Monday how he felt about PayPal, Thiel said he has attachments to the company but he recognizes it's out of his control.

"It's your baby," Forum host Michael Krasney asked him on-air.

"It's well past adolescent kid at this point," Thiel responded.