Yahoo Beats out Google on O2 Germany

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Yahoo said it has replaced Google as the search provider on O2 Germany's mobile portal, continuing the battle among search providers for placement on mobile phones.

In addition to the search component, the multiyear deal includes links on O2's portal to Yahoo sites including Flickr, Yahoo Eurosport, Yahoo Finance, Yahoo Weather, Yahoo News and Yahoo Mail. Yahoo will also provide sponsored search mobile advertising as part of the agreement. O2 has 15 million users in Germany.

The announcement Monday follows one that Yahoo made in 2007 with Telefonica, which owns O2. That deal put Yahoo search on Telefonica phones in Latin America and O2 in the U.K., but it excluded O2 Germany because that operator had just signed a deal with Google, said Mitch Lazar, managing director of Yahoo Mobile Europe.

Yahoo won over O2 Germany by demonstrating the benefits Yahoo brought to O2 in the U.K., he said. In the U.K., the deal with Yahoo has encouraged users to stay on O2's mobile portal for longer times, he said. In addition, Yahoo in 2008 won a search deal with T-Mobile Germany, also displacing Google, and O2 Germany saw the benefits of that deal, he said.

Search providers are competing aggressively to try to win the loyalty of mobile users, whom they believe can help bring in a significant new source of revenue through advertising. That competition has led to innovations in mobile search.

"We don't believe consumers want millions of links" when searching from a mobile phone, Lazar said. Yahoo was one of the first to tailor search results for mobile users, displaying top results that are more likely to be relevant to a mobile user.

Competition is driving that kind of innovation. "It's why we have this hunger to reinvent and innovate around mobile because it's a place we could differentiate and redefine," Lazar said. By comparison, search on computers has not had such dramatic innovation, perhaps because Google has such dominance in the market.

The level of competition for mobile search is apparent in the way that search deals with operators have changed hands in recent years.

In early 2008, Google replaced Yahoo as the search provider for the Opera Mini and Opera Mobile browsers. Yahoo scored a major coup, however, around the same time when it replaced Google and became the preferred mobile search provider for all of T-Mobile's European properties.

Microsoft is also in the mix, winning a five-year deal to preinstall its search as the default search engine for Verizon mobile phones.

The deals with operators can pay off. They "dramatically improve the growth of audience for Yahoo," Lazar said.

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