In fact, according to Mike Boland, senior analyst at The Kelsey Group, the deal is indicative of a huge shift in the way that mobile service carriers are starting to view technology companies, paved in part by AT&T's groundbreaking deal with Apple for the iPhone.
"Apple broke that barrier between the service carriers and technology companies," Boland said. "The entire mobile industry saw the benefits of letting a tech company come in and do what they do best, which is the hardware and software. And now we've seen this domino effect, with iPhone-driven query volume picking up for Google and iPhone-based traffic surges to other sites. So AT&T's competitors see that they need to partner to take advantage of increased data consumption, as well as mobile search advertising."
Still, the possible partnership between Verizon and Google could be described as a truce between "frienemies." The two giants have clashed in the press and on Capitol Hill, with regard to the terms of the FCC's auction of the 700 MHz wireless spectrum in January, as well as about broadband traffic throttling and net neutrality.
The deal would essentially make Google search the "on deck" option on Verizon mobile devices, and they would split any ensuing ad revenue. It would come as a welcome change, according to subscribers like Larry Dignan, executive editor of ZDNet. "To say the Verizon Wireless default search experience is messy is an understatement," Dignan wrote, in a blog post about the deal rumors. "I'm a Verizon Wireless customer and I get bounced all over the place depending on whatever deal the carrier cut."
Boland says that subscribers exposed to the iPhone's smooth, streamlined search and browsing interface are increasingly unwilling to pay for poorer mobile experiences, and carriers are under the gun to partner with tech providers as a result. "Apple created a catalyst with the iPhone, and now there's no going back," Boland said. "Companies like Verizon are almost forced to find partnerships for competitive reasons. They'd probably rather go back to the way it used to be, where they had all the control, but new standards have been set in the marketplace."
Greg Sterling, senior analyst & program director for Local Mobile Search agrees. "The U.S. carriers that 'open up' faster and give consumers ways to personalize their devices and gain access to the types of content they want will win, those that resist will not," he wrote, in a blog post titled "Carrier Universe Opening Up."
On the other hand, the deal would be one more step in Google's push for mobile search domination. CEO Eric Schmidt mused that the search giant would eventually be able to generate more revenue from mobile advertising than desktop in a guest spot on CNBC's "Mad Money with Jim Cramer." "Over time, we will make more money from mobile advertising," Schmidt said. "The reason is because the mobile computer is more targeted. Think about it--you carry your phone everywhere; it knows all about you."
But Google faces steep competition, particularly on the international front, from Yahoo. The Web giant currently boasts mobile search and advertising partnerships with nearly 30 mobile service providers and carriers, including Telefonic in Latin America, Orange in Europe, and Reliance Communications in Asia.