Yesterday, Cnet reported that Google has signed a deal with Verizon superpages. Under the agreement, Verizon’s sales representative will sell Google Adwords to small businesses in local markets.

Google Adwords is Google’s pay per click advertising program. If you’ve ever done a search on Google (and who hasn’t), the Google Adwords listings appear in the “sponsored links” section of the results page. When a user clicks on one of these links, they are taken to the advertiser’s website and the advertiser pays Google a fee. The amount of the fee varies based on the popularaity of the phrase that the searcher typed into the search bar, and the position of the advertiser on the page.

The new agreement works like this: Verizon sells its own pay per click ads, but often does not have the amount of traffic that Google does. They may have an advertiser who budgets $400 per month for pay per click advertising. Verizon may only be able to deliver $200 per month of traffic to that advertiser. The remaining $200 will then be spent with Google Adwords.

The new deal gives Google deep penetration into the local market and access to small businesses who may not have considered advertising with Google before.

Red Herring reported today that Google is being sued by kinderstart.com over the loss of search engine rankings. Kinderstart claims they lost 70% of the page views they had before March of last year due to poorer rankings in the Google search engine than at that time.

With over 85% of all internet page views originating at a search engine and Google’s dominance of internet search, a law suit like this was bound to happen. There are many internet companies who rely on search engine traffic for their income. The formulas that search engines use to determine which sites rank higher than other sites for any given key word are proprietary and often change. The goal for the search engine is to provide the most relavant search results possible.

After all, search engines make money primarily through advertising. Like most media, the more people who view their content, the more advertising dollars they make. People go to Google because they think google has the most relavent search results. It is, therefore, in Google’s best interest to actually have the best search results, lest their own page views rapidly decline.

The question the lawsuit ultimately raises is whether a search engine can be held liable for loss of business due to a change in rankings. I’m inclined to believe a search engine should not be held liable. If a company has a tremendous influx of business due to publicity from a series of newspaper articles, can that company then sue the newspaper when the series of articles ends and business declines? Can a movie studio sue a reviewer if a bad review leads to a poor opening weekend?

A listing on Google, Yahoo! or any other search engine is not unlike a review. Like a good review, it’s a privilege, not a right. The bottom line is that the search engines are businesses too and they have to do what is in their own best interests to stay profitable.