Verizon Wireless denied claims that it was blocking the Google Wallet mobile payment application on the upcoming Galaxy Nexus.
"Recent reports that Verizon is blocking Google Wallet on our devices are false," the company said in a statement today. "Verizon does not block applications."
Google Wallet, unlike other applications, needs to be integrated into a secure part of the phone that is proprietary to Verizon, the carrier said. As a result, Verizon and Google are still in commercial talks over the issue.
The issue is a rare instance in which Verizon and Google haven't been aligned--the partnership between executives from both sides was forged during the development of the first Droid smartphone.
Verizon's response comes amid reports that the upcoming Galaxy Nexus, which will showcase the latest Android operating system, Ice Cream Sandwich, will come without Google Wallet. The capability was initially shown off with the Nexus S, and many had expected it show up with the Galaxy Nexus since the service is a major priority for Google.
But Google told CNET that Verizon had asked it to remove Google Wallet from the phone, confirming a story by Computerworld.
Many pondered if Verizon was blocking the service because it would compete with its own mobile-payment service, which is still in development as part of a carrier-backed joint venture with AT&T and T-Mobile USA called Isis.
Regardless, the news set off a storm of criticism against Verizon, which was seen as going back on its promise to remain open. Media and consumer advocate group Free Press called the move disappointing.
"Verizon shows no hesitation in using its gatekeeper position over its subscribers to restrict or block applications that compete with its own offerings," Free Press Director Matt Wood said.
Verizon, however, said this is more of a hardware issue. Verizon phones have what is known as a secure element, which is where sensitive financial information is stored. Google Wallet would need to tap into the secure element to let the phone work as a digital wallet, allowing consumers to wave their phone in front of special cash registers to pay for goods or services.
Google Wallet doesn't work like other m-commerce services, Verizon said.