Vodafone: Google must be reined in

VODAFONE boss Vittorio Colao yesterday called on policymakers to address Google’s dominance in mobile advertising “before it is too late”.

He used his keynote speech at Mobile World Congress in Barcelona to launch a thinly-veiled attack on the internet search giant, arguing that its power could hinder consumer choice.

Gesturing to a slide which showed Yahoo and Google’s logos, Colao said that the “70 or 80 per cent share” that the pair enjoy in mobile advertising was something “that needs to be looked at from a policy perspective”.

He added: “We need to avoid concentration before it’s too late. If we cannot enjoy an open and competitive environment, we will end up with…an accumulation of negotiating power leading to unbalanced competition”.

Vodafone is concerned that Google is cashing in on mobile advertising – an industry that research group Gartner says will be worth $13.5bn (£8.55bn) by 2010 – while the UK-listed mobile phone business is left footing the bill for infrastructure upgrades.

Like rival operators, it is making huge investments in its network to cope with the explosion of customers using the internet on their phones, but stiff competition is keeping prices too low to allow them to make a decent return.

Colao suggested that Vodafone could force Google to pay fees to use its network, in exchange for guaranteeing faster speeds.

“I would not say no to Google’s money,” he said.

But Google boss Erich Schmidt, who also delivered a keynote speech at the mobile industry’s annual trade fair, said the firm had no intention of stumping up.

He said: “Why would we pay them to use the network when they’re having such revenue growth because of the applications that we and others are providing?

“The answer is: we wouldn’t pay it.”

Colao also launched a broadside against rivals Telefonica and Deutsche Telekom, calling on regulators to make it easier for the likes of Vodafone to compete in the landline telephone and broadband market.

He said: “After nearly 15 years of market liberalisation, one player typically accounts for around 60 to 80 per cent of cash flow [in Spain and Germany], which is not something we should be proud of.”

But Colao added that BT, Britain’s former state-owned telco, was much better at opening up its network to competitors.