Last Updated Aug 22, 2008 3:00 PM EDT
It's the latest sign that telecom companies are finally conceding that their homegrown search services have stalled -- and that they need help from the Internet's big guns. Carriers have been reluctant to team up with established Internet players, not wanting to hand over a potentially lucrative stream of advertising revenue.Telecom carriers are starting to give in because they can't figure out how to attract a search audience, let alone build the business infrastructure to sell the ads. Also, don't be fooled by the Journal's headline; this is all about selling and delivering ads, whether attached to search, general browsing, or text messaging.
That's where the self-reinforcement comes in. Verizon wants revenue, and Google says, "Sure, we're happy to create an equitable split. But you do realize, of course, that we need to implement ad display and monetization differently on cell phones. So why don't you put in orders for handsets running Android?"
Poof! Suddenly the revenue desire of the carriers drives them to choose handsets that are capable of delivering the ads that will turn into extra money. Forget for a moment that people might resent getting ads when they pay for phone service. The carrier executives will go to where they think some easy extra cash lies.
As the story says, the deal isn't final, and one of the sticking points is keeping information from the searches, which the carriers won't want to do, as they've long prized all customer information. But I'm guessing that, in the end, Google will get what it wants. Verizon may be the number two wireless provider, but Google is so dominant in online advertising that it will have the greater leverage in negotiations.
Once one vendor starts to cave in, the rest will as well, because the carrier market is too competitive. No single company can afford to walk away from deals and leave others with a revenue advantage. Right now, who's the viable alternative to Google? No one, because success is about being able to both sell and deliver ads.
And then there's this interesting paragraph:
Verizon eventually wants to put the Google search bar on the home screen of its phones, people familiar with the matter say, which could prove attractive to consumers who reflexively use the Internet search engine on their PCs. The deal could later extend to Verizon's Web portal and even its FiOS TV service, they add.That puts into context the thought that Google wants Android to power more than phones. You might expect ads to show up in all sorts of places.