Microsoft swipes Verizon search deal from Google

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Microsoft swipes Verizon search deal from Google

By CAROLINE GABRIEL

Published: 9 January, 2009

READ MORE: Google | Verizon | Microsoft

Verizon Wireless has confirmed that it will adopt Microsoft Live Search as its default mobile search engine, in a blow to Google, which despite its dominance of the PC environment, is rapidly losing carrier deals in the US and Asia - important to user uptake of its services and advertising.

Yahoo has snapped up a long list of Asian operator deals and is the default search for AT&T and T-Mobile, leaving Google with only Sprint Nextel among the big four US operators. In August, Google was close to a deal with Verizon to get its search bar included as the default, with a coveted home screen position, but Microsoft seems to have offered a larger share of advertising revenue from searches and a guarantee of higher payments.

Verizon and Microsoft confirmed they have entered a five-year agreement, effective from the first half of this year, for all the CDMA carrier's featurephones and smartphones. Live Search will be available from the home screen and will provide portal, local and internet searches. The Windows giant will also manage search and display advertising on its partner's mobile internet services. According to Wall Street Journal reports last year, Microsoft has guaranteed payments of about $500m to $650m over the five-year period, though neither side has revealed financial details.

Roger Entner, head of telecoms research at Nielsen, told Reuters the deal gives Microsoft "a good fighting chance" in mobile search. "Otherwise they would have been almost insurmountably behind Google." Analysts also estimate that Verizon will pocket 60%-70% of advertising revenues. Since its recently confirmed merger with Alltel, Verizon offers its new friend a customer base of 70m.

The new deal gives Microsoft revenge for when Google poached the Sprint deal from under its nose last year. It has also signed a global agreement with PC maker Dell to make Live Search the default engine on most of that vendor's consumer and small business PCs, for three years to come. This follows similar agreements with Hewlett-Packard and Lenovo.

During his keynote address at CES, Microsoft CEO Steve Ballmer stressed that cellphones are now a key part of the converged world, and said there are now 11 Windows Mobile handsets that have broken the one million unit sales barrier, and that 30 new phones based on the OS have launched in the past year.