Court Rules T-Online Must Keep Overture

A court in Germany has ruled that T-Online must honor its contract with Overture Services for search services.

Overture said the ruling, issued by a Frankfurt court Monday, means that T-Online must switch back to its search services after dumping it in favor of rival Google last month. T-Online invoked a contract clause that it claimed allowed it an out in the event of a change of control like Overture’s agreement earlier this summer to be bought by Yahoo. T-Online said it considers Yahoo a direct competitor, while Google only competes with it in search.

Overture said at the time that it would pursue all avenues to make sure its contract was honored until its end. T-Online had switched both paid and algorithmic search to Google, after previously working with Overture-owned FAST and with the company’s paid search services.

“We were very disappointed about T-Online’s decision to stop serving Overture search listings, placing the German ISP in serious breach of contract at several levels,” said Nick Hynes, Overture Europe’s president and managing director, in a statement. “Although our contract is watertight on this matter, our preference would have been to discuss a mutually acceptable solution rather than go to court.”

Representatives for T-Online and Google were unavailable for immediate comment on Tuesday morning. The T-Online site was still returning search results from Google, but an Overture representative said it should switch back to Overture and FAST once T-Online receives official notification of the ruling this week. If it does not comply, the representative said T-Online would face court-imposed penalties.

The court fight signifies Overture’s intention to keep its distribution network intact even after it merges with Yahoo. When the deal was announced in July, Yahoo CEO Terry Semel said the combination would make sense even without Overture’s distribution partners. Both Semel and Overture executives stressed the company would try to convince partners that Overture under the Yahoo umbrella offered better opportunities thanks to products tested and refined on the Yahoo network.

T-Online signed a contract for Web search with FAST in October 2001 and with Overture for paid search in December 2001.

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

The switch to Google represented Google’s first major paid search distribution partner in Germany.

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

Overture’s international operations, which are forecast to break even this year, were a major focus of the company prior to the Yahoo deal. Overture has operations in a number of European markets, as well as Japan and Korea. Many of its big international partners, such as America Online and MSN, compete with Yahoo for traffic.