Microsoft said closer to Verizon search deal

Microsoft is getting closer to a deal to become the default search provider for Verizon Wireless, according to a report Tuesday in The Wall Street Journal that cited people close to negotiations.

Microsoft would share ad revenue with Verizon under terms being considered, with guaranteed payments to the wireless carrier of $550 million to $650 million over five years, or twice what is Google was offering, according to people familiar with the deal. Microsoft is also reportedly negotiating to put its Windows Mobile operating system on more Verizon devices. The combined deals are valued at $1 billion.

Reports that Microsoft was trying to hijack the Verizon deal from Google surfaced last week after Google bowed to federal regulators' opposition and killed its controversial advertising partnership with Yahoo. Microsoft showed its desire to move into Google's search territory earlier this year when it made its ultimately unsuccessful bid to buy Yahoo.

While mobile search is still a nascent market, Google controls the lion's share with 61 percent, followed distantly by Yahoo with 18 percent and Microsoft with 5 percent, according to Nielsen figures.

Google's preoccupation with regulators over the Yahoo deal reportedly helped create the opening for Microsoft with Verizon, the sources told The Journal.

The move comes as the two companies ramp up their efforts in the mobile arena. The first phone based on Google's Android mobile operating system--a challenger to Microsoft's Windows Mobile--recently went on sale.