Bloomberg: Microsoft not investing in Cyanogen after all, but a deal is still possible

Microsoft has decided not to invest in Cyanogen at this time, according to a new report from Bloomberg.

Back in January, the Wall Street Journal reported that Cyanogen was in the final stages of securing a new investment round worth around $70 million and that Microsoft would be one of the investors participating in the round.

If a new report from Bloomberg is accurate, Microsoft has passed on the opportunity to invest at this time, though Satya Nadella’s company may still be interested in a “commercial deal” that would put its software onto Cyanogen devices. Microsoft and Cyanogen reportedly held talks about such a deal, but it’s unclear how things will unfold now that the investment is no longer on the table. The companies declined to comment.

Even without Microsoft, Cyanogen managed to raise around $110 million, in a round that values it at $500 million, according to the report.

Cyanogen is effectively trying to fork Android, and that requires finding alternatives to Google’s apps and services, from email, to mapping, and productivity. The startup hopes to attract partners looking to establish a stronger presence on Android, free of Google’s constraints. So far Cyanogen has only teamed up with small players, like Nextbit, SwiftKey, and most recently Boxer. A deal putting Microsoft’s apps on Cyanogen devices would be a real coup for the startup founded by Steve Kondik and Kirt McMaster.

Cyanogen is trying to have its cake and eat it too. Its Android-based operating system is only interesting to manufacturers and users as long as it ships with Google apps, so, at least for now, Cyanogen has to play within the limits imposed by Google. At the same time, by pre-loading Cyanogen OS with non-Google apps and services, the company is laying the foundation of an OS that is free of Google, for better or worse. That’s a difficult undertaking but the potential payoff may be worth the effort.