Comcast Unhappy with Google, Talking to Microsoft for a Better Deal

Comcast is busy negotiating with Microsoft so as to find a potential replacement for Google search on the Comcast.net portal. Comcast is the largest cable operator in the United States with over 24 million cable subscribers and is the second-largest high-speed Internet provider (second only to AT&T). Comcast.net receives around 15 million visitors per month and is one of the biggest non-Google sources of search queries handled by Google. Comcast is currently under contract with Google through the end of this year but appears to be less than satisfied for the following reasons:

1) First and foremost (not surprisingly), Comcast wants to be shown the money. The company’s cut is expected to be around $70 million for this year (according to sources familiar with the deal) and Comcast wants roughly 40% more or about $100 million total. Apparently, Google has plenty of wiggle room if Comcast can ask for 40% more (as an aside: no matter how irrational the Comcast executives are, they wouldn’t be stupid enough to ask for more than Google generates, which means Google currently gets well over 40% of whatever revenue Comcast makes for the search company).

2) Comcast also wants Google to work harder at increasing how many searches happen at Comcast.net. An example given: Google should make it possible for readers viewing a specific news story to search easily for both related text and video.

3) The third Comcast desire seems weak: the company doesn’t think Google provides sufficient detail as to how exactly it uses data acquired from Comcast.net searches. No details as to what Comcast is looking for specifically here.

Of course, Comcast is giving Google a chance to respond but wants to make a decision within the next few weeks. Thus, the negotiations with Microsoft’s MSN unit are under way. And Microsoft seems determined to regain market share in the online marketplace (just look at the Lenovo deal from last week).

In any event, Comcast seems to be in a better bargaining position than it was the previous time it made this choice…

*Update* PaidContent picked up the story and mentioned something interesting I left out: Comcast only wants to sell 80% of its advertising and leave 20% to itself to build its in-house brands.

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