AT&T is poised to be the number one carrier for Windows Phone 8 this holiday season. Many Verizon customers, who also happen to be Windows Phone fans, were distraught to find that the Lumia 920 was exclusive to AT&T. Now it looks like Verizon might not even carry a single Windows Phone because Microsoft cares too much about your privacy.

Wait, what?

You see, a recent privacy policy update allows Verizon to spy on and share users’ location data and Web usage habits. According to International Digital Times, Verizon is using this newfound power to share information with advertisers. The carrier gets ad dollars and advertisers get valuable tracking data to further target their ads.

Microsoft is having none of it. They won’t let Verizon install spyware on Windows Phone 8, and Verizon won’t carry the devices for that reason. Daily Mobile reports that both parties are working towards an agreement, but Microsoft seems unwilling to give any leeway to Verizon on the matter.

Where have I heard all of this before? Oh right, this is just like Microsoft’s current fight with advertisers over the “Do Not Track” button being set on by default in Internet Explorer 10. Microsoft has come out in defense of privacy, and advertisers don’t like it one bit. They even went as far as saying that advertisers could just ignore any DNT signals being sent by IE10.

So where does this leave Windows Phone 8 if this rumored situation ends up being true? Verizon is a major carrier and very popular among the populace. Windows Phone 8 can’t afford to lose such an important carrier, but Microsoft is wanting to be the good guy here. Will it be morality or cold hard cash that wins out in the end? My bet is on the latter.

We’ve reached out to Verizon and Microsoft on the issue and will update when he hear back.

UPDATE: Microsoft announced that Verizon would be carrying a number of Windows Phones at the company’s Windows Phone 8 event. If there was any truth to this report, the two parties have apparently worked it out.