Rough economic times always seem to hit the largely venture capital- and ad-supported Web industry hard. One impact of the current downturn seems to be a free-for-all battle among large Web players to sew up important distribution and partnership deals with telecom service providers.
Several developments in recent days point to some reshuffling of deck chairs.
According to the Wall Street Journal, Microsoft is negotiating to steal a mobile search deal with Verizon Wireless away from Google (also see: How To Do a Deal with Google from the Telephony 2.0 blog). Last week, Google pulled out of a previously announced search advertising partnership with Yahoo, citing regulatory concerns. Meanwhile, in a 10Q filing last week, Yahoo revealed that AT&T had paid it an upfront fee of $350 million for its renegotiated DSL/broadband portal ad deal, terms more favorable to the service provider than its previous contract with Yahoo.
What does this all mean? With available venture capital dollars for Web companies plummeting – falling 47% in the third quarter versus the previous quarter, according to VentureSource – service providers would do well to set themselves up as content and ad partnership sugar daddies, with highly-favorable terms, of course.