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Yahoo! Cedes European Auction to eBay

Portal site Yahoo!, deciding that it can't necessarily be all things to all people online, will shut down its auction sites in Europe and let eBay pick up the slack.

Sunnyvale, Calif.-based Yahoo! Inc. said it signed a multi-year, multi-million-dollar deal with San Jose, Calif.-based auction leader eBay Inc. , which will feature a link on the portal site's front door in Europe.

Yahoo! launched its auction operation in Britain and Ireland in 1999, and later expanded it to Italy, Spain, Italy, Germany and France. But it never caught on the way execs had hoped and in fact it trailed eBay, Amazon.com and QXL Ricardo in most European countries.

Yahoo Europe's managing director Mark Opzoomer was quoted as saying the decision was made at the end of the first quarter as it became apparent that it would be too costly to catch up with competitors.

"Our business would be better served focusing on the core retailing and commerce businesses," Opzoomer told Reuters, adding the move would not result in job losses.

"This is not a deal that is going to shift the competitive landscape in Europe from our perspective," eBay Europe managing director Michael Van Swaaij told Reuters. "We were very much larger than they were."

Yahoo! has been actively trying to expand its revenue stream following the decline in Internet advertising, and the auction business has been a part of that effort.

Financial terms of the Yahoo!-eBay deal were not disclosed, but eBay will be paying Yahoo! for the marketing exposure. Yahoo! will continueto operate its auction site in Sweden, Norway and Denmark for the time being. U.S. auction efforts remain ongoing.