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Yesterday at the Consumer Electronics Show in Las Vegas, Microsoft CEO Steve Ballmer announced the development of a coveted liaison with Verizon Wireless.
The five-year contract makes Microsoft the default search provider to Verizon's sizable user base. It will also manage mobile advertising across the carrier's handheld units.
Crucially, it gives Microsoft a foothold in an increasingly lucrative mobile search/ad market dominated by rivals Google and Yahoo.
And for Google in particular, the news is a major blow: as far back as August, it was in talks with Verizon to form just such a pact. Losing the contract comes mere months after reports that Yahoo was chosen to power mobile carrier T-Mobile's new "web2go" portal.
Effective in the first half of 2009, Microsoft Live Search will be the de jure search option on Verizon's mobile portals, in addition to providing local and internet search on feature phones and smartphones. Both typed queries and voice commands can be used, depending on the capabilities of the mobile unit.
Microsoft will also manage search and display advertising across Verizon's mobile web offering.
Financial terms of the agreement were not disclosed, but in a November report on the potential liaison, the Wall Street Journal said Microsoft and Verizon would share search ad revenue, with the latter receiving guaranteed payments of between $550 million and $650 million over the five-year life of the deal — twice the amount offered by Google.
Verizon recently announced the $5.9 billion acquisition of Alltel Corp., a small rival carrier. The purchase officiates this Friday — and will make Verizon the nation's largest wireless carrier, serving about 78 million subscribers, reports MediaPost.