• BusinessWeek, Friday, January 9, 2009 11:31 AM

How big a loss is the Verizon mobile search deal for Google? BusinessWeek's Rob Hof says it depends on how Verizon positions search on its devices. However, as browsing via the mobile Web becomes more important, Hof wonders whether such deals are "less important than they used to be."

According to Nielsen Mobile, only 20% of mobile subscribers use search on their phones. Of those, 60% use Google, 18% use Yahoo and only 6% use Microsoft. Hof deduces that since Google's only exclusive deals are with Sprint Nextel and the Android-based T-Mobile G1 phone, "it's clear that most people are choosing Google regardless of what the default search option is."

So was this a good or bad move for Microsoft? The software giant agreed to pay a hefty $650 million in guaranteed payments to Verizon over five years for the right to be the telecom giant's default search provider. That figure could very well exceed the ad revenue Microsoft generates, says Bernstein Research analyst Jeffrey Lindsay. Cash-rich Microsoft can clearly afford to take a slight loss on the deal, "but five years is a long time in this business to put off any hope of profits," says Hof. Meanwhile, Google losing out on deals like this makes it harder for regulatory officials to make a case that the search giant has a monopoly in search.

Read the whole story at BusinessWeek »