Microsoft, Verizon Agree on Mobile Phone Search

Microsoft Bing has become the default search on Verizon-powered mobile devices as part of a five-year deal.

According to a January story in The New York Times, which quoted an unnamed source “familiar with the deal,” Microsoft will pay Verizon somewhere in the neighborhood of $500 million for the lifetime of the agreement. When asked about the financial terms of the deal by eWEEK, a Microsoft spokesperson had no comment.

Charles Johnson, Microsoft’s general manager for mobile media, told Bloomberg that Microsoft mobile search on Verizon handled 19 million queries in its first 20 days, a jump of 10 to 15 times over the previous rate.

In 2008, Yahoo and T-Mobile reached a similar deal, with Yahoo’s OneSearch being installed as the search engine on T-Mobile USA phones.

Along with mobile search comes the inevitable surge in mobile advertising.

Scott Howe, corporate vice president of Microsoft’s advertiser and publisher solutions group, told Reuters while attending the Cannes Lions International Advertising Festival in June that he expected mobile advertisements to increase to 5 to 10 percent of worldwide media spending within five years, as companies sought alternative ways to extend their brands.

“It won’t happen all at once, it will happen gradually,” Howe said at the time. “Mobile phone advertising is going to be one of the fastest-growing segments this year because it is growing out of a small space.”

In the face of this predicted expansion, watchdog groups such as the Center for Digital Democracy and U.S. PIRG (U.S. Public Interest Research Group) have pushed back, arguing that advertisers could potentially use mobile devices to more effectively violate the privacy of consumers. A complaint lodged in January alleged that mobile marketers were aggressively using data mining and other techniques to target the 267 million mobile users in the United States.

Whatever the response, Microsoft-like Google, Yahoo, and other companies devoted to search-is determined to earn more market share within the advertising-rich search engine segment through Bing, which offers traditional search along with tabs that offer search in categories such as Travel and Shopping. According to ComScore, Bing’s daily penetration has increased among U.S. searchers since its June 3 rollout, reaching 16.7 percent by its second week of release.

The same report suggested that Microsoft’s share of U.S. search result pages increased to 12.1 percent during the same period, a rise of 3 percentage points from the period preceding the release of Bing.