RealTime IT News

Oops! Verizon CEO Leaks Microsoft Search Deal

It's a little like giving away the punch line to a joke too early.

Microsoft CEO Steve Ballmer is primed to unveil a search and advertising deal with Verizon Wireless during his pre-conference keynote this evening at the 2009 Consumer Electronics Show (CES) in Las Vegas.

As it turned out, it was Verizon Communication's CEO, Ivan Seidenberg, who announced the deal during at a Citigroup conference Wednesday morning -- taking some of the surprise value out of Ballmer's speech tonight.

Through the agreement between the two companies, Microsoft's Live Search will become the default search engine for Verizon Wireless' mobile phones. Neither Microsoft nor Verizon spokespeople would give further details of the agreement in advance of Ballmer's speech, which is being Webcast and runs from 6:30 p.m. to 8 p.m. Pacific time.

"We can confirm the Microsoft, Verizon Wireless mobile search and advertising relationship, but have no further details to disclose at this time," a Microsoft (NASDAQ: MSFT) spokesperson said in an e-mail to InternetNews.com this morning.

Despite having stolen a bit of Ballmer's thunder, Seidenberg's announcement still marks a significant victory for Microsoft -- especially since Verizon Wireless, a joint venture of Verizon (NYSE: VZ) and Vodafone (NYSE: VOD), is poised to become the nation's largest wireless carrier later this week, when it finalizes its $28 billion acquisition of Alltel.

As a result, the agreement may give Microsoft some important ammunition in its battle against Google and Yahoo, according to one industry analyst. That's because many handset buyers use the default browser that comes with their phones instead of customizing the device to use a different search engine.

"By sheer convenience and placement, they're going to get exposure to Microsoft Search," Charlene Li, industry analyst and founder of Altimeter Group, told InternetNews.com.

Becoming the default search engine for Verizon Wireless users may be a signal victory for Microsoft particularly in its rivalry against Google -- and especially after Microsoft's ill-fated attempt to buy out Yahoo or its search business last year. Microsoft had undertaken both efforts in a bid to better compete against its archrival.

In fact, the Microsoft and Verizon deal may mark a major coup, given that rumors abounded last summer that Verizon was close to a similar deal with Google.

"It does give Microsoft a leg up [on Google and Yahoo Search] for the more casual user," Li said. "Microsoft can chip away at the Google block."

As for Ballmer's presentation, the Verizon news is the second rabbit to get let out of the hat too early.

Microsoft is set to announce the start of public beta testing for Windows 7 at tonight's keynote. However, the testing period's announcement has become a poorly kept secret in the weeks running up to CES.