Report: Vodafone dumping Google for Yahoo

Looks like Google is losing yet another mobile phone search deal, this time to Yahoo. Bloomberg reports that Vodafone is about to make Yahoo its search provider of choice in Europe, pushing out incumbent Google. If the reports are true, Google could be on track to lose a big chunk of the lucrative mobile search market. And that begs the question: Why isn't Google working harder to win these search deals?

Vodafone's agreement with Google expires this year, and according to Bloomberg sources, Yahoo is the front-runner to take the business. The deal, however, has yet to be finalized and other providers are still in the running, sources say.

The news must be disheartening to Google, especially in light of the fact that it lost a similar deal with Verizon to Microsoft. Why can't Google hold on and win these mobile search deals, especially against competitors with smaller overall market share and clout?

It's probably a simple matter of return on investment. Microsoft reportedly agreed to pay Verizon between $550 million and $650 million over 5 years, or more than twice what Google offered in its losing bid. And those numbers are probably similar in the Vodafone deal. Yahoo is surely paying a pretty penny to snag the default search location on every phone distributed by Vodafone, the world's largest mobile phone company.

But while landing default search is nice, overall market control is nicer, especially as mobile phones evolve to be more PC-like. Now that phones come with larger screens, 3G networks and faster browsing, default search isn't that big a deal. Just like with PCs, where most users get Microsoft Live Search as the default, few leave it at that. It's just as easy--and even faster in some cases--to browse over to Google, with its known, predictable search experience.

So why should Google pay ransom to the carriers, when users can choose to use the engine they know best just as easily--especially in this economy, where every penny counts? Looks like Google's decided it shouldn't.

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