In an indication of its displeasure with Google, cable operator Comcast is negotiating with Microsoft to install MSN's search function on its broadband portal. Comcast wants a greater share of the revenue generated when users enter terms into the search box on its site. The company will earn about $70 million this year from its arrangement with Google. But because Comcast.net gets about 15 million visitors per month, making it a major source of search queries, the company feels it is entitled to at least $100 million. Comcast is also dissatisfied with Google's efforts to increase searches from Comcast.net and claims Google has not provided enough information on how it uses the data it acquires from Comcast.net users. Google's deal with Comcast expires at the end of 2007, and Comcast has solicited proposals from other Internet companies. Despite its talks with Microsoft, Comcast might elect to stay with Google in the end because of its "scale, clout with advertisers and...popularity of its search results." Comcast is also talking to Microsoft, Yahoo and Time Warner's AOL unit about a multi-year deal to sell 80% of the advertising on Comcast.net.
Sources: Wall Street Journal
Commentary: GOOG Starts to Monetize Google Apps, "Brutal" Timing for Microsoft • Threatened by Internet Video, Cable Providers Strive to Compete • Internet Service Providers: Is Net Neutrality Hurting or Helping?
Stocks/ETFs to watch: Comcast Corp. (CMCSA), Google Inc. (GOOG), Microsoft Corp. (MSFT). Competitors: Yahoo! Inc. (YHOO), DirecTV Group Inc. (DTV), EchoStar Communications Corp. (DISH). ETFs: PowerShares Dynamic Large Cap Growth (PWB), Vanguard Consumer Discretionary ETF (VCR), First Trust Dow Jones Internet Index (FDN)
Conference call transcripts: Comcast Q4 2006, Google Q4 2006, Microsoft F2Q07 (Qtr End 12/31/06)
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