Did Google pick PayPal’s pocket for new Google Wallet platform?

by Howard Wolinsky

Google (GOOG) stole the limelight Thursday with its plans to turn Android smartphones into Google Wallets with near-field communications, as reported Thursday by Phil Hornshaw in Appolicious.

Then, PayPal from eBay Inc. (EBAY) hours later charged in a lawsuit that Google stole its mobile payment secrets, reported Joseph Galante and Joel Rosenblatt in Bloomberg. PayPal alleged “misappropriation of trade secrets” and “breach of fiduciary duty.”

Google had no comment.

Google’s Wallet service, announced at a press conference Thursday, will enable users to use smartphones as debit cards.

PayPal charged that Osama Bedier, a former PayPal executive now at Google, brought PayPal’s confidential information to Google, the company charged in a suit filed in California Superior Court in San Jose. The company also said Stephanie Tilenius, a former PayPal executive now at Google, violated contractual obligations by recruiting Bedier.

Bedier “is now leading Google’s efforts to bring point of sale technologies and services to retailers on its behalf,” PayPal said. “Bedier and Google have misappropriated PayPal trade secrets by disclosing them within Google and to major retailers.”

PayPal contends that Google had been negotiating with PayPal for two years to power payments on mobile devices. But when the deal was about to be signed, PayPal claimed Google backed off and instead hired Bedier, who had been negotiating on behalf of PayPal.

Erick Schonfeld said in TechCrunch: “All of this coincided with Larry Page taking over as CEO, and a shift in Google’s strategy to build instead of partner in mobile payments.”

He added: “Assuming this thing gets settled before it goes to court, how much is hiring Bedier going to end up costing Google?”

Meanwhile, MasterCard (MA) and Citibank (C) have signed on for Google Wallet. And field testing of the technology is underway in New York and San Francisco, with plans to launch the service to the general public this summer.

The service will be free as Google monetizes it through ads.