December 06, 2011

Google Wallet Won't Be Available, Initially, on Verizon Wireless Galaxy Nexus


Google says Verizon Wireless has "asked" it not to include Google Wallet functionality on the new Android-powered Galaxy Nexus smart phone Verizon Wireless is introducing in December 2011. It does not immediately seem as though the decision is irrevocable, though. "We are continuing our commercial discussions with Google on this issue," Verizon Wireless Spokesman Jeffrey Nelson said.

You can speculate about why Verizon Wireless might not want Google Wallet loaded onto the device. For starters, Verizon Wireless is a major owner of the Isis mobile wallet service that will compete with Google Wallet, but not quite yet. Isis launch in 2012

You might argue that Verizon Wireless does not want to hand a competitor an advantage until Isis is able to compete. That might explain why Verizon Wireless says it is continuing to talk with Google. 

Also, the executives at Verizon Wireless are too experienced to set up a permanent and potentially regulation-inducing "blocking of lawful applications" test case.

It might be one thing for Apple to act as an applications gatekeeper for the Apple App Store, or to favor iTunes as the default media player environment on its own devices. Apple does not have the regulatory heritage Verizon does. Facebook and Google play similar roles, many would argue. 

The real difference is that Verizon has faced, and will continue to face, higher levels of regulatory scrutiny, most recently the Federal Communications Commission's rule making on network neutrality, for example. 

For such reasons, it would highly unlikely that Verizon Wireless would, on a permanent basis, actually block the mobile banking service from running, as an end user option, on Verizon devices, as would also be the case for AT&T Android devices in the future. 

For Google, Google Wallet availability on devices made by a wide variety of devices, made by many suppliers and able to overcome the highly-restricted state of potential users and devices is key. Google never planned for, nor would it be likely able to surmount, a situation where the Google Wallet did not work on a large number of devices, supported on virtually all networks. 

Verizon Blocks Google Wallet on New Smartphones

The issue of how many different "wallet" platforms can coexist, either on user devices or retailer payment terminals, is of course a business issue that the market ultimately will settle over time. What also will settle, over a longer period of time, in all likelihood, are the ultimate roles for various participants in the ecosystem.

All protestations aside, over the longer term, it is not inconceivable that some participants that have only a single role in the ecosystem might elect to play in other roles as well. 

Citi, for example, has been actively involved in the development of Google's mobile wallet strategy, which initially has been available only to consumers in possession of a Citi MasterCard or Google-branded pre-paid MasterCard. Obviously, one source of comfort for Citi is that Google is not interested in payments as a revenue source, but solely in the advertising and marketing opportunities mobile wallets and mobile payment functions can provide. That is not to say Google or Isis could not, in the future, become a competitor to card issuer partners.

It is simply that Google appears to have much more to gain by growing its advertising business by partnering as widely as possible with entities whose business models are based on transaction fees. 

For Isis, some form of transaction fees would appear to be the primary revenue driver, even if Isis does not want to become the mobile equivalent of a credit card issuer. The issue for banks is that other mobile service providers have indeed decided to become issuers, while others have speculated about whether it might ultimately be necessary to become "banks" in a fuller sense. Banks might be threatened

None of these sorts of issues will be sorted out in 2012; that is clear enough.


Gary Kim is a contributing editor for TechZone360. To read more of Gary’s articles, please visit his columnist page.

Edited by Carrie Schmelkin




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