Verizon Blocks Google Wallet, AT&T Likely To Do The Same

It’s being reported today (originally by VentureBeat) that Verizon has blocked implementation of Google Wallet on the new Galaxy Nexus handset. Verizon is the exclusive US carrier of the heavily anticipated device. According to a statement issued to Bloomberg, Verizon is citing security as the rationale:

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

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

As an aside, Google Wallet is a product that encompasses online functionality in addition to mobile payments. It’s the successor to Google Checkout. Here we’re talking only about mobile payments, however.

The Verizon statement about “security concerns” has dubious credibility. Verizon is an investor, along with AT&T and T-Mobile in ISIS, a joint mobile payments venture (to the tune of more than $100 million). That effort is competitive with Google Wallet, which is the more likely reason behind the move.

If competitive motives are behind Verizon’s decision then don’t expect ISIS partners AT&T or T-Mobile to allow Google Wallet either. Indeed, Google has previously said Google Wallet wouldn’t be available with any of them.

If that’s the case then there are some serious potential antitrust implications brewing. Sprint, which isn’t part of ISIS, currently offers the only handset in the US with Google Wallet, the Nexus S.

ISIS is not a real product yet. Rather it’s a business entity intending to introduce a mobile payments market trial next year. It’s unlikely that a full-fledged product would be out before 2013 at the earliest. Meanwhile Google Wallet is a real product with a network of retailers that can accept it.

I’m quite skeptical also that the carriers will be able to deliver a product that offers a compelling user experience. They certainly have the right to try but they shouldn’t be permitted to block Google Wallet because it’s a competitive product — and use security as the pretext.