EBay and PayPal will become separate companies after a 13 year romance that benefited both companies. Activist investors like Carl Icahn have been threatening eBay about spinning off PayPal, and eBay announced it will acquiesce, splitting the companies. Earlier protests against the move from inside eBay pointed out how much of PayPal's business was derived from eBay-generated tranactions.
But PayPal is now so big on its own that the move seems inevitable. PayPal is involved in one in every six dollars spent online today, according to CNN. PayPal accounts for 40% of parent eBay's revenue. Fortune reports that the eBay business is still larger--eBay has $9.9 billion revenue vs. PayPal's $7.2 billion--but that the payment sector is growing faster. (eBay may counter that people have to pay for something, which is where it comes in.) But the payments frontier is in mobile, where competition from Apple and others will challenge the newly independent PayPal. EBay bought PayPal in 2002 for $1.5 billion. Unusually for an acquired company, PayPal only increased its name recognition since the acquisition, as millions of people interact with PayPal independent of any connection to eBay. So the PayPal brand remained undiluted, which helps it going forward on its own.
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