San Francisco — Yahoo! Inc., owner of the second most-used search engine in the U.S., and its newly-accredited CEO Carol Bartz has been carrying out many changes recently, is in discussion with Vodafone Group Plc about the distribution of its mobile search product in Europe, people familiar with the discussion said.
The pact may make Yahoo’s mobile search product the default software on phones sold by Newbury, England-based Vodafone in Europe, said one person, who requested anonymity because no contract has yet been signed. Vodafone has a distribution deal with Google Inc. that expires this year, and Yahoo isn’t the only party the carrier is talking to, the people said.
“Bartz has 2009 to establish that change is not merely being talked about, but is really happening.”
Such a potential search alliance between Yahoo and Vodafone would be a little surprising and very significant too. At the same time, it is far from impossible, because one arrangement already made Yahoo Vodafone’s exclusive display advertising partner in the UK, and last month, Yahoo and Vodafone both struck partnerships with Opera. The companies in 2006 signed a contract for Yahoo to sell advertising on Vodafone’s handsets in the U.K.
“In the long run, mobile phones are just as important as the desktop to have a strong position in,” said Jack Neele, a fund manager at Robeco NV in Rotterdam, which oversees the equivalent of $138 billion. “It is important for Yahoo to get these deals, certainly with a carrier like Vodafone, which has an incredibly big number of customers.”
Nevertheless, Yahoo, striving to close the gap on Google in Internet advertising, needs this. With Google Inc. being the biggest partner with Apple Inc.’s iPhone and having T-Mobile’s G1 smartphone being completely Google-powered, Yahoo! needs a partnership of greater extent right now in the mobile space.
Yahoo already has such partnerships in Europe with wireless operators including Deutsche Telekom AG’s T-Mobile unit and Telefonica SA’s O2 unit, Zealous Wiley, a Yahoo spokesman, said by telephone yesterday.
If it does not get a few big partnerships landed, Google may be on its way to beating it in the mobile space as well.
Yahoo also is continuing discussion with “a number of operators around the world, including Europe,” about its mobile search product, Wiley said. Those talks are with carriers Yahoo currently does not have a distribution deal with, he said.
Sunnyvale, California-based Yahoo has more than 70 distribution deals for mobile search worldwide, Wiley said.
Simon Gordon, a Vodafone spokesman, declined to comment and did not say whether the deal with Google will expire this year. Anthony House, a U.K.-based spokesman for Google, said the company’s agreement with Vodafone from 2006 is “still active.”