We think the wording here is pretty important: "on our multi-media phones." We take this to mean that Verizon's looking at using Bing on its high-end featurephones and its midrange smartphones, possibly keeping the end-to-end Google experience exclusive to its cream of the crop -- which would also explain why the recently-launched Fascinate didn't get the coveted Droid brand as a part of its name."...that is not true. We have a relationship with Microsoft and Bing is the search engine on our multi-media phones but we have never said it would be exclusive on all of our devices."
On a related note, we're hearing from a tipster today that an upcoming low-end Android device for Verizon from LG is loaded with Bing services, which strengthens the case -- it looks like Bing is the "cheap" experience for Big Red right now. We've gotta admit, we're wondering how Microsoft feels about that positioning.
Update: Microsoft is basically corroborating Verizon's statement, saying that "the deal for Verizon Android devices is not exclusive."
Update 2: Verizon is additionally saying that Google's revamped search box that includes its new voice action capabilities will be available for download once the Fascinate hits Android 2.2 -- in other words, they're not explicitly blocking Google services from being installed on the device. Of course, that doesn't solve the root problem, which is that Bing is baked into the shipping ROM -- but it's something, we suppose.
*Verizon has acquired AOL, Engadget's parent company. However, Engadget maintains full editorial control, and Verizon will have to pry it from our cold, dead hands.