In an about-face from earlier this year, eBay has decided to spin PayPal off into its own separate business in 2015. What makes the move so surprising is that eBay has spent the bulk of the year fighting off mounting outside pressure–namely from super-investor Carl Icahn, who penned a corrosive open letter to eBay’s board back in February–to split its core businesses into two.
Following the separation, eBay CEO John Donahoe will step down from his role and will be replaced by eBay veteran Devin Wenig. Dan Schulman, currently president of enterprise growth at American Express, will take the CEO perch at PayPal.
Speaking with CNBC, Donahoe said the decision came after the proxy fight with Icahn forced eBay to take a hard look in the mirror. “What the proxy fight forced was me to come out and articulate our plan of record, our position at that moment, and that’s what I did,” he said. “As we’ve continued our annual assessment, looking forward three to five years about how we can best position eBay and PayPal, we think the competitive position and the competitive environment of commerce and payments are going through accelerating change. That creates new sets of opportunities and challenges for both eBay and PayPal and (we believe) that operating independently will give eBay and PayPal focused strategic flexibility and an ability to move quickly and decisively in this changing environment.”
In a series of letters to eBay’s board back in February (which have since been taken down from his website), Icahn skewered Donahoe for his “ineptitude,” while calling for eBay board members Marc Andreessen and Scott Cook to step down, claiming they weren’t serving the company’s best interests.
What does this mean for PayPal? As the mobile-payment space heats up, with Square, Stripe, Amazon, and Apple all in the mix, Re/code‘s Jason Del Ray suggests that spinning the 12-year-old eBay subsidiary into its own business could reinvigorate PayPal and help it stay competitive when it comes to attracting new talent. If it wasn’t already, the battle for your credit card is now a full-on war.