Yahoo shuts European auction sites

Yahoo referred to its decision to pull out of the online auction business as a multi-year, multi-million euros "marketing alliance" with Ebay.

In the future, Ebay will be featured on Yahoo's internet portal as the auction site of choice.

Yahoo's own auction sites are set to close within six weeks as part of the online firm's efforts to improve profitability.

Employees will be reallocated to other jobs within Yahoo Shopping and Yahoo Travel, so the closure of the auction sites should not cause job losses, said Yahoo Europe's managing director Mark Opzoomer.

Already ahead

Ebay said the added exposure it would get on the Yahoo portal would accelerate its growth, but beyond that, the online auctions operator downplayed the agreement.

"This is not a deal that is going to shift the competitive landscape in Europe from our perspective," Ebay Europe's managing director, Michael Van Swaaij, said.

"We were very much larger than they were."

And so was Amazon.com and QXL Ricardo, the other two leading online auction operators.

Ebay said it would not want to buy Yahoo's auction assets.

Advertising slump

Yahoo was forced to rethink its business following a sharp fall in online advertising spending by companies.

It is now planning to focus on the parts of its business that are making money while ditching the rest.

"Our business would be better served focussing on the core retailing and commerce businesses," Mr Opzoomer said.

Its European auctions business has been singled out as a loss-maker because it failed to attract enough users to allow Yahoo to begin charging for the service, as it does in the US.

As a result, its online auction operations in Spain, Italy, Germany and France, as well as in the UK and Ireland, will shut down.

Yahoo's Danish auction site will survive for the time being, though its future is being reviewed.

Its US and Asian auction sites will not be affected.