Verizon Wireless Blocks Rival Google Wallet




Verizon Wireless, the largest U.S.
wireless carrier, blocked Google Inc.’s competing mobile-payment
system from the new Galaxy Nexus smartphone, citing security
concerns.

Verizon Wireless, co-owned by Verizon Communications Inc. (VZ)
and Vodafone Group Plc (VOD), is working to have “the best security
and user experience,” Jeffrey Nelson, a company spokesman, said
today in an e-mail statement. The Basking Ridge, New Jersey-
based carrier will allow the Google service, called Google
Wallet, “when those goals are achieved.”

The move is a setback for Google and comes amid
intensifying competition between services that let consumers pay
for goods with mobile phones. Verizon Wireless and partners ATT
Inc. (T) and T-Mobile USA plan to invest more than $100 million in a
joint venture called Isis, which competes with the Google
service, people with knowledge of the project said in August.

“The refusal to allow this is probably being used as
leverage in negotiations between Verizon and Google over the
terms of the contract and the sharing of customer information,”
David True, a consultant with Broadly Curious Advisors in New
York, said today in a telephone interview.

The Galaxy Nexus, made by Samsung Electronics Co. (005930), runs the
latest version of Google’s Android software and will go on sale
this month. It is Verizon Wireless’s first Android phone that
uses a near-field communications, or NFC, chip that — through
Google Wallet — can transmit payment information to store
registers.

NFC Integration

Verizon Wireless’s move isn’t because of its competing
payment system, said Nelson. Rather, it’s because Google Wallet
is integrated more deeply on the Nexus phone through the NFC
chip than most other mobile-commerce systems, he said.

“As architected by Google, Google Wallet needs to be
integrated into a new, secure and proprietary hardware element
in our phones,” Nelson said in a separate e-mail. “We are
continuing our commercial discussions with Google (GOOG) on this
issue.”

Verizon Wireless asked Google not to include the payment
technology on the Nexus, said Nate Tyler, a spokesman for the
Mountain View, California-based company.

“Google Wallet is a secure payment platform that has been
designed from the ground up with security as a priority,” Tyler
said in a telephone interview.

Verizon’s competing Isis venture plans to start its service
in a few markets next year.

Blocking a Competitor

With its own mobile payment service in development, Verizon
may be hoping to put a few speed bumps in front of Google in
this emerging field, said Greg Sterling, founder of the
consulting firm Sterling Market Intelligence.

“It’s blocking a competitor’s product from getting to the
market,” Sterling said in an e-mail. “I don’t think the
security concerns are genuine.”

Sterling points to Sprint Nextel Corp. (S), which doesn’t have
a mobile payment product and sells Google’s Nexus S phones with
NFC chips for Google Wallet.

“Sprint obviously didn’t express the same concern about
security in allowing Google Wallet on the Nexus S, and so far
there don’t seem to be any reports that indicate security has
been a problem for users or the carrier,” said Sterling.

To contact the reporter on this story:
Scott Moritz in New York at
smoritz6@bloomberg.net

To contact the editor responsible for this story:
Peter Elstrom at
pelstrom@bloomberg.net

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Article source: http://webfarm.bloomberg.com/news/2011-12-06/verizon-wireless-blocks-google-s-mobile-payment-system-on-security-concern.html

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