Yahoo will close five of its auction sites in Europe and has set up a marketing agreement establishing eBay as its preferred auction partner.
Yahoo said on Wednesday that it will stop accepting new listings for its auction sites within the next two weeks in Ireland, the UK, Germany, France, Spain and Italy and the sites will be closed entirely within six weeks. Subsequently, Yahoo will promote rival eBay's sites for each of those countries via banner ads and text links.
Yahoo will keep its auction operations in Denmark, Sweden and Norway and firm has indicated that it has no intention of winding down its auction business in the US.
"This is an outstanding move for Yahoo Europe, both strategically and financially," Mark Opzoomer, managing director of Yahoo Europe, said in a statement. "We will be able to better utilise our resources to more effectively focus on initiatives where we can extend our leadership position and that will drive long-term growth for the company."
In an interview with the Wall Street Journal, Opzoomer said that Yahoo should focus on the development of advertising and commerce areas, such as shopping and travel, since these areas are growing faster and more profitably than European auctions.
Yahoo has been hard hit by the downturn in Internet advertising. The company has been trying to cut costs and broaden its revenue base and it cut 400 jobs in the autumn of 2001. Meanwhile, it has introduced a number of paid services. This month for instance, Yahoo in the US launched a new Internet access service with SBC Communications.
Meanwhile eBay, which has 46 million users worldwide, has rapidly rising revenues from its German and UK operations, up 35 percent and 42 percent respectively quarter on quarter in the past three months. Both businesses are profitable on a fully allocated basis.
Overall eBay claims that its European businesses are growing between 35 and 40 percent a quarter. Its international sites account for more than 20 percent of the company's revenue and the growth of listings and revenue from its German, UK and Canadian sites have balanced slowing growth in the United States.