Business

Google may exit China, but now is battling Verizon

While Google’s spat with the Chinese government over censorship devolves into an all-out war, the Internet giant is getting into hot water with a company that was seen as an ally: Verizon Communications.

According to a person familiar with the matter, Verizon has been the main company pressing the Federal Trade Commission to investigate, with an eye toward blocking, Google’s $750 million acquisition of mobile advertising company AdMob.

This person said Verizon is fretting that the AdMob deal could be a precursor toGoogle launching its own wireless network, thus becoming a competitor to Verizon Wireless, the cellphone venture co-owned by Verizon and Europe’s Vodafone.

Verizon did not return calls for comment.

While Google has been open about its desire to grab a slice of the potentially lucrative mobile-ad market — it has rolled out its mobile phone software Android and introduced a Google-branded cellphone called the Nexus One — the company has not come out and said it wants to take on wireless carriers.

However, Google owns a stake in wireless broadband company Clearwire, which is developing so-called 4G networks that are faster than the already-speedy 3G networks offered by the major carriers.

“Verizon is challenging this because Google is disrupting wireless by building their own phone network,” the source said.

Bloomberg News last week reported that the FTC has begun reaching out to some Google rivals to weigh in on the AdMob merger, which has some in Washington worried that Google’s dominance in the PC market could be replicated in the cellphone space should the AdMob deal get the all-clear from the feds.

To be sure, any friction that might exist between the two companies over the AdMob acquisition, announced in November, hasn’t reached a level where they can’t work together to knock iPhone maker Apple off its perch. Verizon offers a number of Android-driven phones aimed at chipping away at the dominance of the iPhone, which is only available in the US through Verizon rival AT&T.

Details that a new front is opening up in the battle comes as it looks increasingly likely that Google is within weeks of pulling out of China after failing to reach a truce with the Chinese government over censorship.

Google has been trying to find a way not to heed Chinese demands that it censor search results for those using its Chinese search engine, Google.cn. However, progress toward an agreement has been slow, and over the weekend appeared to be breaking down following strong language from a Chinese government official.

Li Yizhong, China’s minister of industry and information technology, warned that Google will “have to bear the consequences” if it doesn’t filter its search results as required by Chinese law.

Google currently controls about 36 percent of China’s search market, which currently stands at about 400 million users and grows by 250,000 every day.

However, in January Google officials first suggested they might pull out of China because of Beijing’s insistence that search results be censored. With Holly Sanders Ware.