Yahoo! Set for ‘Aggressive’ European Foray

Spurred on by the acquisition of Lycos by Terra Networks SA, Yahoo! will take an “aggressive and opportunistic” approach to moving into the European market this year, according to co-founder Jerry Yang.

“We all have to look outside the U.S. for growth and the next big wave,” Yang told Reuters Thursday as he took part in the Fortune Global Forum. “We will see similar consolidation opportunities in Europe as we did in the United States.”

Customized Growth Strategy

Yang did not unveil specific plans or identify the type of firms Yahoo! might target for takeover as a growth strategy, saying that each approach would vary by market.

“In areas where we have leadership, such as Western Europe and Asia, we need to build up our next generation services and not fall behind in terms of creativity,” he said. “In areas where we are just starting out, such as Latin America, we need to invest and consider market share to be more important in the early days than profitability overall.”

Yang acknowledged that the purchase of Lycos, which regularly ranks behind Yahoo! among U.S. search engines and portals, was a wake-up call to the Internet industry. That deal, said at the time to be worth about $12.5 billion (US$), could give Lycos instant access to huge numbers of Internet users in Western Europe and South America.

Ripe Landscape

Several U.S.-based Internet companies see Europe as a landscape where the rapid growth that marked the earliest days of e-commerce in North America can be duplicated in coming years.

In April, online auctioneer eBay said it would expand into Italy and France by the end of this year and target Scandinavian countries early in 2001. eBay also plans to begin offering wireless bidding services to select European customers in coming months.

Those moves were announced after eBay saw 80 percent growth in some overseas markets in the first quarter of this year.

Notably, a study earlier this year by International Data Corporation (IDC) found that only about five percent of surfers in Western Europe had bought something online and that Europeans spend less time online due to high telephone rates.

Also, Forrester Research reported in March that online sales in Europe are set to grow from $2.8 billion last year to $170 billion by 2005, with annual growth rates of close to 100 percent fueled largely by wireless use.

Multiple Channels

Meanwhile, Yang said Yahoo! is moving ahead with its strategy of making itself available to Web surfers through a wide range of devices.

“One of our challenges going forward is to build that relationship with the average user on a more personalized basis,” he added. “I think everyone is going to be talking about the wireless arena, where especially Western Europe has a significant lead over the U.S. and other countries around the world.”