T-Online Jettisons Overture for Google

Top German Internet service provider and portal T-Online said on Wednesday that it switched Web search and paid listings from Overture Services to Google on account of Yahoo!’s purchase of Overture last month.

The Deutsche Telekom subsidiary used Overture’s FAST unit for Web search and Overture for its keyword listings. Both were switched over to Google last week, according to Mark Nierwetberg, a T-Online spokesman. Neither company would specify the exact length of the multiyear deal.

“We have a very large non-access business,” he said. “In most of these fields, Yahoo! is a direct competitor, whereas Google is a competitor in search and certain specific topics.”

Nierwetberg said T-Online invoked a change-of-control clause in the contracts it signed with FAST in October 2001 and Overture in December 2001. T-Online will continue to use FAST for its portal search.

In a statement, Overture disputed T-Online’s contention that it could terminate the contract on account of the Yahoo! merger.

“We are very disappointed that T-Online has decided prematurely to stop serving Overture listings, which clearly places the company in breach of their contract with us,” the company said. “We are actively pursuing all available approaches to resolve this issue as quickly as possible, including legal action, to ensure that our legally enforceable contract is honored.”

T-Online has nearly 13 million Internet service subscribers and operates portals in Germany and a number of European countries. The company also maintains a number of other European portals, such as Club Internet in France and ya.com in Spain. All T-Online-owned sites will switch from Overture to Google.

The T-Online win is the first major distribution deal Google has signed in Germany, where its own site draws considerable traffic.

The loss of T-Online comes as a blow to Overture’s hope of keeping its affiliate network intact after the deal to combine with Yahoo!. At the time of the deal, Yahoo! said Overture’s affiliate network was not needed to make the deal work. However, both Overture and Yahoo! executives have stressed that they will try to convince partners that Overture will be able to deliver better products operating as an independent subsidiary of Yahoo!.

While most of the focus on partner defections has been on MSN, the T-Online move could spell trouble brewing in Overture’s international network of affiliate sites, some of whom directly compete with Yahoo!’s far-flung empire of international properties. International expansion has been a key objective for Overture this year, with new operations opening in more than half a dozen new markets.

Overture officially launched in Germany in February 2002. T-Online, which boasts 50 percent reach in the German Internet market, was its largest partner. Overture listings still appear on AOL’s Germany site, Freenet.de, and its own Alta Vista site.

Overture has said its international operations will break even this year.

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