If speculative reports from analysts at Barclayâ€™s are to be believed, Google may soon decide to end their search monetisation deal with MySpace.
Doug Anmuth, who is an analyst at Barclayâ€™s, believes that Google is re-evaluating their deal with MySpace. The current deal between the two companies requires Google to pay $900 million to MySpace over a span of three and a half years, which end only in mid 2010.
Google has not been able to reap the expected financial benefits from this deal so far and it seems very likely, given the current worldwide economic climate, that they may decide to pull out of an unsatisfactory partnership.
In fact, if one takes a closer look at some of Googleâ€™s recent financial decisions, it is quite obvious that the search giant is protecting its margins by making some not-so-subtle changes in their policy as regards distribution deals. They are being more prudent where spending money is concerned.
The past few months have seen Google let go of a potential mobile search partnership deal with Verizon Mobile to avoid competing on price and margins with Microsoft. They also did not renew their toolbar distribution deal with Dell and have allowed Microsoft to happily walk in on what was previously Google territory.
Since Google is firmly established as the search market leader, they do not really need to get distribution deals at any cost. This is probably a wise decision for now.
Microsoft, on the other hand, is trying very hard to increase market share in search operations. If Google disengages from the deal with MySpace, Microsoft might swoop in to take their place, even at a higher price than such a deal would be worth.