Apple, Microsoft Discuss Giving Bing Top iPhone Billing

[megri]

In 2003, when Apple said its iTunes music software would work on PCs using the Windows software of its age-old rival, Microsoft, Apple made up posters that read "Hell Froze Over." Hell may be getting frosty again.

Apple (AAPL) is in talks with Microsoft (MSFT) to replace Google (GOOG) as the default search engine on its iPhone, according to two people familiar with the matter. The talks have been under way for weeks, say the people, who asked not to be named because the details have not been made public.

The discussions reflect the accelerating rivalry between Apple and Google, now the main provider of Web search on the iPhone. While the two companies have worked as partners in the past and Google Chief Executive Eric Schmidt had a seat on Apple's board, Apple and Google have more recently begun competing in several markets, including mobile phones. Google sells a smartphone, the Nexus One, that competes directly with the iPhone and it has spearheaded development of a wireless handset operating system that rivals the iPhone OS.