Microsoft Lands Verizon Deal, Loses Office Space, Battles Layoff Rumors—A Seattle Primer

For those of you suffering from Microsoft overload these past few days, I’ve put together a quick roundup of the most locally relevant news from the software giant. Most of it happened away from CEO Steve Ballmer’s keynote at the Consumer Electronics Show in Las Vegas last night.

—Microsoft beat out Google and Yahoo to land a deal with Verizon Wireless to provide Internet search services on the carrier’s cell phones. The news was reported by Reuters and other media outlets in advance of Ballmer’s official announcement at CES. The five-year agreement is rumored to be worth more than $500 million (paid by Microsoft to Verizon). It’s not yet clear what the deal means for Medio Systems, the Seattle startup that handles some mobile search for Verizon and was reportedly involved in deal talks between Verizon and Google last summer.

—Closer to home, Microsoft said it is dropping out of negotiations to lease 300,000 square feet of new office space in the South Lake Union neighborhood of Seattle. A Microsoft spokesman cited the economy and changing market conditions as reasons for backing out of a possible lease. This comes on the heels of Google looking to sublease parts of its Kirkland offices. We’re going to see a lot more of this kind of thing in the next few months, I suspect.

—Lastly, Marcelo Calbucci of the Seattle 2.0 blog site has posted some predictions about what a hypothetical Microsoft layoff would mean to the Seattle startup scene. He predicts an influx of ex-Microsofties into startups, more “silly startups,” and more crowded coffee shops around town—not too surprising. But he also predicts higher costs for office space, not lower, because of increased demand. And further difficulties in the housing market. “It’ll be absolutely tough on the local economy in general,” he writes.

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