Apple Computers has been engaging in talks with Microsoft Corp. to change the default search engine found on the iPhone from Google search, to Microsoft’s Bing search.

The information comes from a source familiar with the discussions on condition of anonymity.

The rivalry between Google and Apple is intensifying, not necessarily in online search directly, but in online mobile advertising. As a record number of people begin adopting online browsing with their mobile phones as web browsers become easier and actually usable, the trends indicate traditional Internet advertising is heading towards online mobile advertising.

To solidify itself as the dominant mobile advertising machine, Google most recently acquired AdMob, a mobile advertising network, for $750-million in stock on November 9, 2009. Apple also made its own acquisition, buying up Quattro Wireless, another mobile ad network, for $250-million, on January 10, 2010.

Both companies will be competing for the same mobile advertising dollars. In the last quarter of 2009, Google owned about 85-percent of the U.S. mobile search market. As most mobile browsing occurs from Apple’s iPhone, why would Apple want its top competitor to be the default search engine? It doesn’t, and that is why, it is very likely the company will finalize a deal to make Bing as the default search engine on the iPhone.

Our source tells us the switch could happen as early as the next generation iPhone, which is expected sometime this year. It is too early to tell if Google search would be an option within the iPhone settings. Currently, in order for users to switch to Bing search, users must download the free Bing search app found in the app store.