T-Mobile drops Google from internet deal

Google suffered a serious blow to its ambitions to move its commanding position in online search on to the mobile internet yesterday, when its first major European partner, T-Mobile, dumped the company in favour of technology from rival Yahoo.

Google will lose more than 90 million mobile users of its search engine as Yahoo replaces the company as T-Mobile's partner in the UK and across the continent. The switch will be particularly galling for Google's European boss, Nikesh Arora, as he used to work for T-Mobile before he joined the Californian company in 2004.

Hamid Akhavan, T-Mobile's chief executive, said the company decided to go with Yahoo because its mobile search technology was better than anything offered by Google. The mobile phone company's customers will still be able to access Google on their phones but on the first page that users hit when they go on to the web through its Web 'n' Walk' service, Google's search bar will be replaced by Yahoo's from April.

"We have established a partnership with Yahoo that is strategic, this one is more than just working together. We believe we can have a longer and deeper relationship," Akhavan said at the Mobile World Congress trade show in Barcelona.

T-Mobile was the first major mobile phone operator to make it easy for consumers to go wherever they want on the mobile internet, signing a landmark deal that placed Google as the front page of Web 'n' Walk in June 2005.

But T-Mobile now wants to make the search results much more relevant to the fact that consumers are using a mobile phone. So while a search for coffee on an internet-connected computer brings up links to Wikipedia and sites about the history of coffee, a search on the new Yahoo oneSearch portal on Web 'n' Walk will produce coffee shops in the local area, using location data supplied by T-Mobile's network. Clicking on a search result will produce a map showing the shop's location. Yahoo will share the revenues it makes from paid-for search advertising with T-Mobile.

Akhavan, however, stressed that T-Mobile will continue to work with Google in other areas including the company's fledgling mobile phone operating system, called Android. He said yesterday that T-Mobile will be offering customers the first so-called Gphone, with the software installed, towards the end of the year.

But Arun Sarin, Vodafone chief executive, yesterday warned that he will not be signing up to Android until he is certain that the technology is not a way for Google to control the mobile internet.

"Frankly we have not participated with Android at this stage because we do not know what this operating system does, how it is connected, how it is wired especially at the back end," he said.

One of the main talking points at the Congress, the industry's largest trade show, has been the threat to the traditional mobile phone companies by online companies and technology firms that want a slice of the mobile internet, such as Microsoft, Google and Nokia.