Vodafone Looking For Fast Exit From Google Mobile Search Partnership?

Ed’s note: Peggy Anne Salz, who you know has been doing our executive interviews for a couple of months, will now be contributing on mobile search and discovery for our site.
Mobile Media (article not online) this week reports that Vodafone is “exploring ways of pulling out” of the three-year deal it sealed with Google in February at 3GSM. It was the open secret in the industry that both Voda and T-Mobile were beginning to have their doubts about their marriage with Google. Now the honeymoon is over rumors are mounting that both operators are ripe for a new union with Yahoo or a white-label solution – or both.
MM reports that revenue share could be the root problem: “Under the terms of the agreement, Google is understood to receive half of the revenues from keyword searches and at least some of the associated advertising revenues generated, prompting fears from Vodafone that its cut of revenues will be reduced.” Predictably, Google told MM the with both is not on the rocks – but that doesn’t jive with what I’ve been hearing at conferences and from industry execs.
They are uneasy about Google – and with good reason. Owning search enables the operator to retain the lion’s share of direct advertising revenues generated by pay-per-call and pay-per-click – revenues streams that could potentially dry up if Google controls the click stream.
Ironically, operators and content providers tell me they have a bigger issue with brand dilution than with the bottom line. It’s not about advertising revenues; it’s about eyeballs. Put simply, they are nervous about sharing valuable screen real estate with the 600 pound gorilla of mobile search. As one major Scandinavian content publisher that recently signed with a white-label search company told me: “We didn’t go with Google because we want to be the name consumers see and remember.”
With a white-label solution this provider can own the customer, collect the data and wield the all-important analytics to deliver users relevant results and not just a list of links. (Google is algorithmic in its approach and not focused on offering personalized search or building social networks around the content users seek and share). These are precisely the areas that will differentiate plain-vanilla search from the value-added releases we’ll be seeing soon — all chock-full of artificial intelligence and technologies that may ultimately remove the need for search altogether.
Finally, this provider also doesn’t need to worry that its agenda and Google’s might someday collide. Google’s search capability is clear – but its intentions are harder to divine. Over the last months Google has released a dizzying number of products and services, many of which conflict with the agenda of content providers and operators. And let’s not forget the far-reaching implications of Google search embedded directly on the mobile device.
Granted, some operators — particularly ones that don’t have a strong brand — may even benefit from a tie-up with Google. But other operators should think this through carefully. Vodafone and T-Mobile, it seems, have their doubts – and DoCoMo has purposely excluded Google from its list of nine search providers for i-mode. Market conditions for white-label have taken a turn for the better and the realization that white-label’s made-for-mobile solutions are one better than Google’s retrofitted Web search also play in their favor. The bottom line: A knee-jerk, “me-too” strategy to cash in on Google’s search strengths may be too short-sighted, result in a disappointing revenue split and ultimately short-change users.
Related:
Google’s Path of Trial and Error On Mobiles
Google And Vodafone Tie Up
U.S. Operators Shying Away From Deals With Online Giants
T-Mobile Sheds Walled Garden; Starts With Google

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