Microsoft Channels Dr. Evil, Close to Handing Verizon One… Billion… Dollars

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Microsoft may potentially close a deal with Verizon that would make MSN the default search engine on Verizon’s mobile handsets in exchange for Microsoft giving them between $550 and $650 million over 5 years.
Google has been going after the same deal, but Microsoft’s offer is twice as large as Google’s ~$300 million proposal.
Microsoft may also pay Verizon to put Windows Mobile on more of its phones for around $400 million, bringing the combined deal total to $1 billion.
Current mobile search market share: Google 61%, Yahoo 18%, Microsoft 5%
As Henry Blodget points out, Microsoft has to be losing money on this deal — there’s no way they can afford to pay twice as much as Google, who dominates search revenue, and remain profitable.
Will Google let this deal go?