Since last week people have been buzzing about a potential mobile deal between Verizon and Google. There's nothing new about the deal in terms of a carrier-search engine relationship. Google and Microsoft have such relationships with Sprint, and AT&T and Yahoo also have an advertising relationship. There are similar carrier-search partnerships outside the US (Google-Vodafone, Yahoo-multiple carriers). What's remarkable or noteworthy about the rumored deal is that it comes after some fairly harsh public rhetoric between the two companies.

For those who didn't already read about it, here are the broad strokes of the potential deal, from the Wall Street Journal:

Verizon Communications Inc. is nearing an agreement with Google Inc. on a wide-ranging partnership, according to people familiar with the situation, in what could be a much-needed jolt for the anemic mobile search business.

It's the latest sign that telecom companies are finally conceding that their homegrown search services have stalled -- and that they need help from the Internet's big guns. Carriers have been reluctant to team up with established Internet players, not wanting to hand over a potentially lucrative stream of advertising revenue.

The deal under discussion, which would make Google the default search provider on Verizon devices and give it a share of ad revenue, is aimed at dramatically simplifying what is now a confusing set of search options for cellphone users. Today, users have to go to different places to look up services such as ringtones, restaurants and Web pages. Verizon wants to create a new search platform that would be a one-stop shop.

The trend toward operator-search engine deals is problematic for the range of "white label" search vendors whose central value proposition is to help carriers defend against search engines. But the trend also reflects a sober recognition on the part of the carriers that (at least) smartphone users are typically going to blow past carrier search to get to their preferred search provider. Indeed, these carrier-search partnerships are part of a larger movement to "open up" the carrier deck, which is both smart and inevitable in the wake of the iPhone. Such moves in the US include SprintWeb and T-Mobile's statements about building an iPhone-like apps store. Verizon has similar ambitions to build a developer community.

Previously, Verizon announced that it would support Android, even as it joined the rival LiMo Foundation. Google has likely offered a sweet rev share or other terms to Verizon that have produced something of a change of heart for the carrier. But Google is pursuing its long-term interests; it needs the largest US carrier (with the Alltel acquisition) to support Android. 

As presented previously in our report, Will Google Dominate the Mobile Web?, the company already has a significant lead in the US mobile search market: 

Source: Nielsen (6/08), n=undisclosed 

 Source: LMS (12/07), caution small sample

 Source: LMS/Multiplied Media (8/08), caution small sample

A deal that would incorporate Google prominently into Verizon's "deck" or otherwise promote Google mobile search and services to Verizon mobile subscribers would likely further advance Google's position in the US market.