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November 25, 2009

Microsoft launches battle with Google in News Corp pact

Following all the shenanigans of late about News Corp threatening to put their content behind paywalls and blocking Google from using its content, the last few days have seen them courting Microsoft in a deal where their content would only be found on Bing.

According a story in weblogs.hitwise.com, the two companies are in negotiations for Bing to become the “exclusive indexer” of their news content. All well and good but do the figures add up? The article shows that: “As of last week, WSJ.com’s referred and non-referred traffic from Google and Google News amounted to 15.3% and 11.0% respectively…The potential loss of Google News traffic is potentially more serious. As reported here, over the three years, WSJ.com’s traffic from Google News has grown from 2% to over 11%…Bing, a potential News Corp suitor for search exclusivity provides less than half of Google News’ volume…”

The story broke a couple of days ago in the Financial Times’ website, saying, “Microsoft has had discussions with News Corp over a plan that would involve the media company being paid to ‘de-index’ its news websites from Google, setting the scene for a search engine battle that could offer a ray of light to the newspaper industry.”

One of the more interesting slants on this story is that: “the Financial Times has learnt that Microsoft has also approached other big online publishers to persuade them to remove their sites from Google’s search engine.” It appears then that, “Microsoft’s interest is being interpreted as a direct assault on Google because it puts pressure on the search engine to start paying for content.”

We all know that the newspaper industry is still trying to construct an online business model that somehow stems the descent of print revenues, but now Microsoft’s deals are being evaluated by antitrust regulators. This is a company desperate to catch up with Google in internet search with the release of Bing this year, as we all know.

With much ado about, well, something, and with other news media outlets all supplying content for free, this deal to block Google in exchange for cash cannot surely be a viable way for News Corp to improve the bottom line for their media outlets? Even more troublesome for News Corp, these deals may not even be legal.

According to DailyFinance.com, several of their legal experts have concluded that: “It could violate anti-trust laws, says to Michael J. Thomas, a principal at the St. Louis law firm Harness Dickey. ‘Anti-competitive behavior is where you’re trying to impair or eliminate someone’s ability to compete against you,’ says Thomas. The fundamental principle is that competition is good for consumers. For Microsoft to pay News Corp (NWS) specifically to withhold its content from Google while making it available to other search engines ‘strikes me as more anti-competitive than competitive’.”

The article continues: “Another possibility is that Google could argue that, by inducing News Corp to sever its existing relationship with Google, Microsoft is committing so-called ‘tortious interference’. Typically, that’s when two parties have a contract and a third party induces one of the two to breach that contract. [Although] there’s no contract that entitles Google to index News Corp’s stories, Google could make a case that its longstanding access to those articles creates a ‘valid business expectancy’, which in some instances is sufficient to allow a tortious interference claim to go forward.”

Even if the antitrust lawsuits give Microsoft the green light, Google’s CEO Eric Schmidt has said before: “In general these models [paying for online content] have not worked for general public consumption because there are enough free sources that the marginal value of paying is not justified based on the incremental value of quantity. So my guess is for niche and specialist markets…it will be possible to do it but I think it is unlikely that you will be able to do it for all news.”

It is highly unlikely that other online publishers will follow Mr Murdoch’s lead or they would have done so by now, but it looks likely that the Microsoft-News Corp deal is an attempt to undo the big men of search. Some hope.

John Sylvester is the media director of V9 Design & Build (http://www.v9designbuild.com) and an expert in search engine optimization and web marketing strategies.

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