Google's Partnerships Faltering?

It has been a tough week for Google partnerships, with Viacom suing for $1B over YouTube--and now, Comcast talking to MSN about possibly switching to that search service on its portal.

Google has been known for keeping its partners happy and for being able to negotiate. Examples: the three-year deal they cut to advertise on MySpace, and also their acquisition of YouTube. What's going on?

One of Comcast's beefs is that it thinks it should be pulling down $100M on ads, rather than $70M, for the ad clicks occurring on its site. Although they have a custom deal set up, this gripe is reminiscent of the classic and mysterious feature of AdSense publishing that publishers don't exactly know how big the pie is - they just get a check in the mail. Publishers have remarkably incomplete information about what's going on, how big the pie is, and how much of the pie they are getting.

Since the "How big is the pie?" issue is a huge one, evidently Google is flexing its market power, which derives strictly from the presence of its ad network (once you're away from www.google.com). It's an uncompetitive scenario that is likely to change. Ad networks are hard to build, but Yahoo! and MSN have them and are building them. I think you can expect to see this offering become increasingly a commodity, with shrinking margins and a shrinking presence of whether you can even tell who's providing the search or ads on any site that isn't yahoo.com, msn.com or google.com. The differentiator for these sites will be getting people to visit their domains and search on them. "Powered by Google" won't help Google much. It will boil down to what it started with -- the attractiveness and quality of the pristine www.google.com.