Gateway.net to Feature Yahoo

Feb 04 1999

You'd think that after closing the $5 billion buyout of GeoCities last week, by far the biggest deal of their lives to date, the guys at Yahoo might get a week off. But at the Grand Hyatt in San Francisco on Wednesday morning, chief Yahoos Jerry Yang and Jeff Mallett were being frantically ushered from conference room to conference room by harried flacks on cell phones.

All the hubbub was for an announcement that Yahoo will be the default start page for Gateway.net, the Internet service Gateway offers to its PC customers. Yahoo will pay Gateway a fee based on usage by Gateway.net customers.

"We couldn't sit still, now that we've got everything on track," said Anil Arora, senior VP at Gateway.net. The company obtained a restraining order just last week against WebAmerica, the company that used to provide Internet access for Gateway.net until it was fired for poor service. Due to the litigation, said Aurora, Gateway has done little to no marketing for Gateway.net, which has 200,000 subscribers. Aurora said a big marketing campaign will launch in about a month.

According to Jeff Mallett, Yahoo's president and COO, two things attracted Yahoo to the Gateway deal. First, Yahoo wants to form an early relationship with new Web surfers; Gateway.net estimates that 90 percent of its PC buyers are first-time Net users. Second, Gateway keeps detailed information about its customers, which Yahoo would not get from an ISP. "We can form a more intimate relationship with the customer," said Mallett. He added, "We don't resell that information. Privacy is strictly enforced."

Yahoo officials say the company is committed to partnering with any number of ISPs and hardware vendors, and already has struck similar deals with Compaq and Hewlett Packard. "We made the call in 1995 when AOL and Prodigy wanted us to be an exclusive access point for them," said Mallett. "Striking one big deal didn't fit with our vision to be the biggest house brand on the Internet."