Verizon Wireless Moves Closer to Choosing Microsoft As Default Search Provider

Last week the Wall Street Journal reported that Microsoft was trying to “steal away” an almost-done default search deal between Google and Verizon Wireless that would have given Google a high-profile presence on Verizon handsets. Verizon is the largest wireless carrier in the US with more than 80 million subscribers (post Alltel acquisition).

Reuters now reports that Verizon is “closer” to choosing Microsoft as default search vendor to replace Google. According to the article:

Under the terms being considered, Microsoft would share with Verizon revenue from ads shown in response to cell phone Web searches, with guaranteed payments to the carrier of about $550 million to $650 million over five years, roughly twice what Google Inc offered, the people told the paper.

That says it all. The deal isn’t final, however, and the article describes the situation as “fluid.”

Microsoft doesn’t have as many search advertisers as Google today and so couldn’t monetize search results as well. It’s thus compensating via proposed guaranteed payments to Verizon (not unlike the original Google-MySpace ads deal). Earlier this week, Microsoft announced a deal with Sun for distribution on the desktop through a Java-related prompt to download the MSN toolbar.

In terms of other US wireless carriers, Sprint has search-related deals with both Google and Microsoft. Google is also an investor in the Sprint-majority owned Clearwire WiMax initiative. AT&T has a deal with Yahoo, but AT&T’s highest profile phone (the iPhone) favors Google. And T-Mobile, of course, just released the G1, the first Android-based phone.

Mobile search in the US is dominated by Google today, with market share numbers that roughly parallel the desktop according to Nielsen and comScore. However, a default deal with the US’s largest wireless carrier would be a coup for Microsoft.

Also see our past post, Google Partners With LG & Mobile Handset Maker Deal Chart. It’s from the middle of last year but still provides a useful overview of who is partnered in terms of handsets, rather than carriers.