Verizon Communications is nearing an agreement with Google on a wide-ranging partnership in what could be a much-needed jolt for the anemic mobile search business.
It's the latest sign that telecom companies are finally conceding that their homegrown search services have stalled -- and that they need help from the Internet's big guns. Carriers have been reluctant to team up with established Internet players, not wanting to hand over a potentially lucrative stream of advertising revenue.
The deal under discussion, which would make Google the default search provider on Verizon devices and give it a share of ad revenue, is aimed at dramatically simplifying what is now a confusing set of search options for cellphone users. Today, users have to go to different places to look up services such as ringtones, websites and restaurants. Verizon wants a single unified search platform.
The deal isn't yet final and the two sides are still negotiating on key issues, such as Google's desire to save information from user cellphone searches. Carriers prize such information and are reluctant to turn it over. Verizon, the second largest wireless provider in the US by number of subscribers, has considered other Web search partners, including Microsoft.
Google wants closer integration with carriers like Verizon so it can enhance the relevance of the ads it shows -- for example, by making them sensitive to a user's location. Google has tried for more than a year to strike such a deal with Verizon, but the big hang-up has always been how much of a revenue share it would get.
A deal would mark a rapprochement between the companies who have had a testy relationship. Bad blood built up when Google backed regulations that required wireless carriers to begin opening their networks to more services and handsets. Verizon was the most vehement critic of those rules. Verizon also is the only major US carrier that hasn't expressed interest in carrying phones with Google's Android mobile operating system.
Google has managed to take an early lead in mobile Web search, just as it became the dominant search engine on PCs. Most people type Google's URL into browsers to get to the search engine. Google also got a boost when Apple made it the default search bar on iPhones.
Carriers initially focused on building their own search services in partnerships with small providers such as Medio. Rivals JumpTap and MCN also provide search for several operators. Those services have been successful mainly at allowing users to search for digital content like ringtones, but searching the Web isn't their specialty.
Now the industry is rapidly turning to the Web giants for help. But unlike Verizon's new initiative, other carriers so far aren't linking Google and other Internet giants into a broader package of search services that would include offerings like ringtones. Sprint Nextel recently added Google as the default Web search bar on browsers in over 40 of its phones. As part of that deal, Sprint shares revenue from ads Google displays in response to searches. AT&T the largest US carrier, plans to use Yahoo to power Web search through its MEdia Net portal starting later this year. Foreign carriers like T-Mobile and KDDI in Japan already have partnerships in place with Google and Yahoo. (info from The Wall Street Journal)