Popular auction site e-Bay has pulled its US advertising from search engine giant and rival Google over what is considered the latter''s provocative decision to hold an event on the same evening as e-Bay''s annual merchants'' conference, e-Bay Live.

In the US, e-Bay spends an estimated $25 million a year advertising on AdWords, Google''s advertising system that shows advertisements based on keyword searches on the web, making it potentially the largest single source of revenue for Google.

e-Bay believes Google''s event was aimed at attracting attention away from its payment system PayPal, the largest online payments system, to Google''s own card processing service, Checkout, launched in the US last year.

Checkout is currently banned on e-Bay and Google''s manoeuvre may have been part of the search engine''s efforts to force the online auctioneer to accept Google''s payment processing system.

Later, Google cancelled its own function a day prior to the event and announced in its blog, "After speaking with officials at eBay, we at Google agreed it was better for us not to feature this event during the eBay Live conference."

Observers expect eBay to resume advertising on Google, which accounts for over 50 per cent of search queries in the US and 80 per cent in Europe, though they expect more skirmishes between the two market leaders.