One of the unlikely beneficiaries from Verizon’s new deal to sell phones running Google’s Android operating system could be Microsoft’s mobile search division, which has a 5-year deal to power search and mobile advertising for Verizon Wireless, the top U.S. wireless carrier.
Google is traditionally the default search engine on Android phones. But Microsoft’s Bing could replace Google as the default search engine on some of Verizon’s Android phones, we have confirmed with the carrier.
This will not materially affect either company, since neither sees any significant revenue from mobile advertising. But depending on how good the devices are, and how Verizon prices data plans for them, Microsoft could see a small uptick in mobile search activity. (And therefore, more potential revenue for Microsoft and Verizon to share.)
This doesn’t particularly help Google: The whole point of Android is for Google to make money off mobile advertising — it doesn’t charge anything for the OS, and loses money consulting for carriers — and it certainly doesn’t make any money when someone performs a mobile search with Bing.
But it’s probably only a modest loss, if any:
- Google will still be able to generate revenue from customers who manually go to Google.com to search, or who bookmark Google.
- The phones may even include an option to change the default search engine to Google.
- And, of course, Google powers advertising all over the Web, and can generate revenue from that, too. One of the broader points of Android is to increase mobile Web usage in general, by including a browser that’s better than the garbage on most phones. This benefits Google.
- If these are “dumb” phones, they’re probably not going to be used for Web surfing anyway.
While seeing Bing as the default search tool on an Android phone may be awkward for Google, this is one of the costs and benefits of Android, which is open-source, and can be modified substantially by carrier partners (or anyone — even Microsoft, RIM, or another rival).
The fact that Verizon can chop up Android to fit its needs (and other business deals) is one of the reasons it decided to support the operating system in the first place. But it’s also one way that Google could be left out of the revenue equation, or at least get a smaller cut.
Another way Android could get chopped up: Some Verizon Android phones may ship without a mobile app store, we understand.
We don’t think this will be something that happens on Android smartphones — apps are a huge sales point, as every carrier that’s not named AT&T tries to make up for the fact that they can’t sell the iPhone.
But it’s possible some “dumb” or “feature” phones, which don’t have the hardware capabilities to run smartphone-tailored Android apps, may not get an app store. Instead, they may only run simple apps like a Web browser, and Verizon-furnished apps, such as mobile video, navigation, etc.
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