Google and Microsoft tangle again — over Verizon

November 12, 2008

Chalk one up for Microsoft — sort of.

If today’s report in the Wall Street Journal is right, then Microsoft is about to land an agreement with Verizon Wireless to become the default search provider on its cellphones.

In its battle with Google, that should count as a win for Microsoft, even if the company had to offer much, much better terms than its rival.

From the article: “Verizon is tilting toward Microsoft because the software giant is offering significantly better financial incentives, but the telecom company is still in discussions with Google and the situation is fluid with both companies, these people said.”

The WSJ says the deal would likely call for Microsoft to share revenue with Verizon when advertisements come up in response to a search. It reports that there would likely be guarenteed payments to Verizon of $550 million to $650 million over five years. That’s about twice what Google offered, according to the report.

If accurate, Microsoft’s super aggressive offer shows just how worried it is about Google. It needs wins, particularly when it comes to search deals.  But as Silicon Alley Insider points out, Google is under some pressure, too.

“Google is now probably getting quietly desperate, too (stock price $300), so it will be interesting to see if it panics and does something economically stupid. Probably not, but possible, given how much Google is betting on the growth of mobile.”

And so the battle rages on…

Keep an eye on:

  • Dentsu, Japan’s largest advertising company, cut its annual profit outlook by 20 percent and said it would buy a U.S. ad agency as it seeks growth outside the stagnant and mature domestic market (Reuters)
  • Conde Nast’s online media division laid off more than three dozen staffers from ad sales to infrastructure (AdAge.com)
  • Shares in struggling Midway Games Inc. – media mogul Sumner Redstone’s pricey gamble on the video game business - sank to a fresh all-time low (NY Post

(Photo: Reuters)

4 comments

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I am just asking myself why Verizon is going for Microsoft – it should listen more to what its customers want – which search engine they prefer (which is pretty obvious looking at the figures)? Otherwise their customers might change to an other company that offers Google as a search provider on their mobile phones… A better offer from Microsoft does not automaitcally mean it is profitable for Verizon on the long term…

Posted by Sven | Report as abusive

Microsoft is better off spending that half a billion and more to improve its search instead of spending on market share when they have nothing to offer.

Yet another deal where Microsoft is buying market share by forcing product use along with the deal. This does two things.

1. Verizon will get screwed by Microsoft. Microsoft always does it in these deals. Just wait and see Verizon. You will regret it.

2. True competition will be squashed by the Microsoft trust again. Palm, Blackberry, Google, and any newcomers will be pushed out over time as Microsoft tightens its grip. When will the US Government Anti-Trust people get some guts and fight this kind of stuff.

As for me, I was considering a move for my small business cell phone service to Verizon. I will wait now because and look at alternatives because I don’t need to use a company that makes these kind of deals.

Posted by Tom Stone | Report as abusive

This is terribly foolish. Microsoft could not search their way out of a porta-potty. I want Google on my phone and nothing else will do. I just enabled Verizon Mobileweb solely for the purpose of being able to do a Google search.