Jan. 7 (Bloomberg) -- Microsoft Corp., the third most-used Internet search engine, forged a deal with Verizon Wireless to provide Web browsing services to mobile-phone users, beating out search leader Google Inc.

Microsoft Chief Executive Officer Steve Ballmer will detail the accord later today at the Consumer Electronics Show in Las Vegas, Ivan Seidenberg, CEO of Verizon Communications Inc., a co-owner of Verizon Wireless, said at an investor conference today.

Verizon Wireless, which expects to surpass AT&T Inc. this week as the largest U.S. wireless provider, had sought a search partner to boost subscribers’ data use. Microsoft, the biggest software maker, had one-seventh the Internet search traffic of Google in November, according to Nielsen Co. Microsoft is paying to cement this deal and ones with Hewlett-Packard Co. and Sun Microsystems Inc. to try to narrow that gap.

“I’m sure Microsoft is giving these companies good deals to get carriage but that’s not necessarily a bad thing,” said David Card, an analyst at Forrester Research Inc. in New York. “People will use what’s on the screen to do the searches so that’s important for Microsoft even if they do wind up overpaying a little.”

Microsoft, based in Redmond, Washington, fell $1.25, or 6 percent, to $19.51 at 4 p.m. on the Nasdaq Stock Market. It lost 45 percent in 2008. New York-based Verizon Communications gained 40 cents, or 1.3 percent, to $31.90 in New York Stock Exchange composite trading. The shares fell 22 percent last year.

Microsoft spokesman Tom Pilla declined to comment. Verizon Wireless spokesman Jim Gerace didn’t return a phone message.

New Products

Verizon Wireless, based in Basking Ridge, New Jersey, will boost customer spending on data services, such as picture messages and Internet access, by introducing new devices this year, Seidenberg said. The company will have more phones in 2009 that can operate internationally and will introduce handsets that allow Internet-based voice conversations, he said.

The company expects to complete its $28.1 billion acquisition of Alltel Corp. on Jan. 9, adding almost 14 million subscribers to its rolls to leapfrog Dallas-based AT&T.

Seidenberg predicted Verizon Communications profit will grow this year and said earnings increased 7 percent to 8 percent in 2008. In October, he had forecast 2008 growth “somewhere around” 8 percent. Verizon will report fourth- quarter and full-year earnings on Jan. 27.

Sales to corporate customers may decline or remain even in the first half of 2009 as companies slash jobs and spending, Seidenberg said.

To contact the reporter on this story: Crayton Harrison in Dallas at tharrison5@bloomberg.net.

Last Updated: January 7, 2009 16:16 EST