It’s official. Microsoft (NSDQ: MSFT) has won the deal to become the default search provider on all phones on the Verizon Wireless (NYSE: VZ) network, reports Reuters. The two companies said they would go into greater detail into the deal later today at CES in Las Vegas. In November last year, the WSJ reported that in an effort to snatch the deal from Google (NSDQ: GOOG), Microsoft was offering guaranteed payments to the carrier of approximately $550 million to $650 million over five years—about twice what the search giant had proposed. The payments are to come from the ads that Microsoft would be able to serve up with search results.

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But as my colleague Tricia Duryee reported earlier, the deal needs to be looked at as a strategic deal, as the payments—said to be seriously inflated—don’t make economic sense. In order for Microsoft to guarantee the numbers floated, each Verizon Wireless subscriber would have to conduct at least 17 searches a month, which Citi analyst Mark Mahaney said in an analysis was an “aggressive” assumption. The trouble, of course, is when users start going off-portal and deciding themselves which search engine they’d like to use. In that case, Google which already has a dominant share of mobile search will most likely continue its momentum. This is Microsoft’s first mobile search deal in the US. Yahoo (NSDQ: YHOO) is the search provider for AT&T (NYSE: T) and T-Mobile, while Google powers Sprint’s search.

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