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Verizon Comes Calling for Google

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Search engine to become even more ubiquitous.

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Verizon (VZ) and Google (GOOG) are close to establishing a partnership intended to simplify search options for cell phone users.

The deal would make Google the default search provider on Verizon cell phones, the Wall Street Journal reports.

Telecommunications firms have been reluctant to cut deals with Internet companies because they don't want to split advertising revenue.

The deal hasn't been completed; both sides hope to reach an agreement in a few weeks. One possible sticking point: Google wants to retain information from cell phone searchers, and carriers have been reluctant to disclose it.

The likely deal between Verizon and Google underscores what users have long been saying: Current search options are cumbersome, confusing and often require more than one step. Verizon seeks to create one-stop shopping. Eventually, Verizon wants to install the Google search bar on its phones' home screens.

Verizon is the nation's number-2 wireless carrier in terms of subscribers. It's considered other Web search partners, including Microsoft (MSFT). Medio Systems, a startup based in Seattle, now handles digital content searches for Verizon and would manage the all-in-one-search. It would also link to additional Internet content.

All companies would split revenue from advertising that's sent to users in response to keywords, but the percentage for each company hasn't yet been determined.

The mobile search advertising market is small, generating about $244 million this year. But telecommunications and Internet companies expect the market to grow rapidly in the future.

Google can key ads to the cell phone user's location, a capability that's sure to give some the Big Brother heebie-jeebies.

AT&T (T), the nation's largest carrier, plans to use Yahoo (YHOO) to power its Web searches later this year. Apple's (AAPL) iPhone already made Google its default search. Sprint Nextel (S) recently made Google the default Web search on browsers for about 40 of its phones.

Google is the leader in mobile Web search with about 63% of the market. Yahoo grabs a 34% share and 25% of users say they use carriers' services, comScore M:Metrics reports.

A deal between Verizon and Google would represent a truce between the companies. Google backed regulations that force wireless carriers to open their networks to more services and handsets. Verizon has strongly criticized those rules.

In the past, wireless companies have built their own search services by establishing partnerships with new companies such as Medio, JumpTap of Cambridge, Mass. and MCN, a Japanese company. The services allow users to search for digital content such as ring tones, but don't specialize in Web searches.

Google is moving beyond pay per click Web search ads and into telecommunications and online video. The first phones using Google's Android mobile operating system are expected to be available in December.
No positions in stocks mentioned.
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