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Head of eBay's PayPal unit steps down to join Facebook

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[June 10, 2014]  By Deepa Seetharaman and Alexei Oreskovic

SAN FRANCISCO (Reuters) - David Marcus, who has led eBay Inc's fast-growing payments unit PayPal for the past two years, will step down this month to run Facebook Inc's messaging products, the companies announced on Monday.

EBay shares fell a little more than 2 percent in trading after hours. Under Marcus, PayPal has moved more aggressively into the physical world by developing a mobile wallet for consumers as well as point-of-sale systems for retailers.

The move marks Facebook's latest effort to bolster its private messaging features as it faces competition from a new crop of popular mobile messaging services such as Snapchat and Line. In February, Facebook stunned observers by announcing plans to acquire messaging service WhatsApp for $19 billion.

In the newly created role of vice president of messaging products, Marcus will oversee the Messenger service within Facebook's social network as well as the free Messenger mobile app, but not WhatsApp, said Facebook spokeswoman Vanessa Chan.

Roughly 12 billion messages are sent every day on Facebook, and the Messenger app has more than 200 million users, according to the company.

The move could also signal Facebook's interest in transforming its messaging service into a platform for transactions, such as buying concert tickets or making restaurant reservations, said Brian Blau, an analyst with industry research firm Gartner.

"Clearly with a background in e-commerce and payments, itís natural to think that heís going to bring a lot of that to Facebook, presumably around messaging," said Blau.

While Facebook has struggled to make e-commerce a popular activity on its core social networking website, messaging services are increasingly adding transactional capabilities. WeChat, the mobile messaging service owned by China's Tencent Holdings, began letting users book taxis through the service earlier this year. Google Inc's Gmail introduced a feature last year that lets users transfer money to each other.

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"I'm looking forward to getting my hands dirty again attempting to build something new and meaningful at scale," Marcus said in a post on his LinkedIn page on Monday. Marcus said that he decided to join Facebook after Chief Executive Officer Mark Zuckerberg "shared a compelling vision about mobile messaging."

The move comes as PayPal, which has 148 million active users, faces tougher global competition from Amazon.com Inc, which launched a recurring payments program earlier on Monday, as well as Chinese e-commerce giant Alibaba Group Holdings Ltd, which is going public later this year.

In a blog post, eBay Chief Executive John Donahoe said Marcus was leaving behind a strong leadership team and PayPal was on track to meet its outlook for 2015.

(Reporting by Deepa Seetharaman; Editing by Marguerita Choy and Lisa Shumaker)

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