A Bing deal for Microsoft, News Corp.?

Microsoft has been in early discussions about a pact to pay News Corp. to remove links to its news content from Google’s search engine and display them exclusively on Microsoft’s Bing. If such an arrangement came to pass, it would be a watershed moment in the history of the Internet, and set off a fierce debate over the future of content online.

By TIM ARANGO and ASHLEE VANCE

The New York Times

KEVIN P. CASEY / AP

Steve Ballmer

Rupert Murdoch
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This is not how business has been done on the World Wide Web.

Microsoft has been in early discussions with News Corp., the media conglomerate controlled by Rupert Murdoch, about a pact to pay News Corp. to remove links to its news content from Google’s search engine and display them exclusively on Microsoft’s Bing, according to a person briefed on the matter who spoke anonymously because of the confidential negotiations.

If such an arrangement came to pass, it would be a watershed moment in the history of the Internet, and set off a fierce debate over the future of content online.

The Web’s explosive growth has been driven, in part, by the open playing field it represents for consumers and businesses.

These discussions could encourage major technology and media companies to start picking sides — essentially applying the cable-TV model to the Web.

A deal on a large scale would create a new set of barriers for users to navigate and would represent an enormous risk for News Corp. or any news site.

More than 65 percent of all search inquiries are made on Google, and removing links from there would lead to a big drop in traffic. Bing handles 9.9 percent of searches, according to comScore.

Steve Ballmer, the chief executive of Redmond-based Microsoft, said in a recent interview that Google handled about six times as many search queries as Microsoft, and that Google’s search ads generated more revenue per click.

But Microsoft executives have been clear about their intentions to pursue bold measures to disrupt Google’s dominant position in the search market.

A broad tie-up with media companies would represent Microsoft’s most drastic measure to date — one in which it would be running a high-stakes experiment against Google, which also has deep pockets.

The development, first reported by The Financial Times, comes as many content providers, including newspapers and other news-media companies, are re-evaluating their Web strategy.

The expected riches from online advertising have not materialized, and many outlets are considering charging for access to their online content, as some sites, including The Wall Street Journal, owned by News Corp., already do.

Negotiating fees from search engines is a significant new wrinkle in online strategy, at least raising the hope that such a deal may finally establish a precedent that sets a value for online news beyond advertising revenue or subscriptions. Murdoch has been especially vocal about trying to get paid for his company’s news content online. News Corp. owns many newspapers, including the New York Post, The Times of London and The Sun in Britain.

In a recent interview with Sky News Australia, Murdoch said that Google and other online entities “steal our stories.”

As for the argument that blocking Google would effectively diminish the online audience for his newspapers, he said, “We’d rather have fewer people coming to our Web sites, but paying.”

A spokeswoman for Microsoft said the company declined to comment on “rumors and speculation.” A News Corp. spokeswoman declined to comment.

Thus far, Microsoft has tried to drum up interest in its search service Bing, introduced in May, by presenting users with a more colorful interface and, where it can, more detailed results.

In addition, the company signed a deal this year to take over the technology infrastructure behind Yahoo’s search service in exchange for a partnership tied to search ads.

“The most important thing is to have a point of view, try to be unique, try to add value and try to make money,” Ballmer said.

Danny Sullivan, the editor of Search Engine Land, a Web site that tracks the online search industry, argued that Microsoft would need to bring a number of publications into its fold to represent a real threat to Google.

Without such deals in place, he viewed the rumblings about a possible link between Microsoft and the News Corp. as little more than a negotiating ploy.

“My reaction is that this is probably more of Murdoch trying to put pressure on Google for a deal than anything else,” Sullivan said.

Microsoft has also shown a willingness to tap its vast cash reserves and pay people who are willing to use its search service in favor of Google’s. The company, for example, offers discounts on certain products that are located through a Bing search and has similar discount arrangements in place with such online stores as eBay.

Bing’s start was the latest in a number of attempts by Microsoft to revitalize its search business.

While Bing has helped Microsoft raise its market share, the gains have yet to translate into a meaningful increase in search revenue, said Brendan Barnicle, a software analyst with Pacific Crest Securities.

It remains difficult to tell how much money Microsoft could make by pulling more people toward Bing through content deals with publishers. Google does pay publishers for content, but in limited ways. For example, it has a deal with The Associated Press to carry the full text of its articles.

It is technologically simple for a publisher to keep a search engine from linking to a site’s pages. The publisher must simply post a special file on the site with instructions that can be read by the “crawlers” sent out by such companies as Microsoft and Google to handle indexing. For example, it might tell Bing to index certain pages or tell Google to stay away.

Seattle Real Estate Tyler Freed