Verizon to Microsoft: Hey Big Spender
by John Paczkowski
Posted on November 7, 2008 at 6:05 AM PT
If Microsoft’s leadership were to author a 600-page guide to competitive strategy, it would consist of this sentence repeated over and over again, “The Shining” style for half of them:
It’s always easier to buy your way into a profitable market, than earn it.”
So it is that, Microsoft (MSFT)–which has been paying people to use its Live Search engine to find and purchase products online–is now working to buy its way into the mobile search market by outbidding Google on the search giant’s deal with Verizon. Google (GOOG), as you may recall, has been in talks with Verizon (VZ) for months now about a mobile search pact that would make it the default search on Verizon devices and might someday put the ubiquitous Google search bar on the home screen of its phones. In return, Verizon would share in the revenue generated by the targeted ads Google serves up in its search results.
With mobile search clearly an area of rapid growth for the future, this deal is a strategically important and valuable one for Google, which has said publicly that mobile revenue streams will soon outpace desktop revenues. Which means it’s even more strategically important for Microsoft, one of search’s perennial also-rans. Little wonder then that the company has opened its own discussions with Verizon and is offering the carrier a more generous revenue-sharing plan than the one proposed by Google and a higher guarantee, to boot.
After all, it’s not like we haven’t seen this move before. Back in 1996, Microsoft snatched away Netscape’s browser deal with AOL in exactly the same way.
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