Nov. 23 (Bloomberg) -- News Corp. is considering blocking Google Inc.’s Internet search engine from displaying its news articles and is talking to Microsoft Corp. about listing only on its site, according to people familiar with the matter.

The talks with Microsoft are still at an early stage and may not result in an agreement, said the people, who declined to be identified because the discussions are private. Redmond, Washington-based Microsoft is also talking to other publishers, one of the people said.

Microsoft is seeking exclusive content to draw users to its Bing search engine in an industry dominated by Google, which has about six times as many U.S. users. News Corp. Chairman and Chief Executive Officer Rupert Murdoch said this month he may block Google from scanning and indexing stories from his newspapers, which include the Wall Street Journal and Times of London.

“It’s self-destructive on the part of News Corp. to remove itself entirely from Google,” said Greg Sterling, principal at consulting and research firm Sterling Market Intelligence in San Francisco. “The implication is that Microsoft would somehow compensate News Corp. for that, but there’s a meaningful number of page views that come to these publications from Google’s search results.”

Online Subscriptions

The Wall Street Journal charges users for access to its Web site. Murdoch has said he plans to start online subscriptions for all of News Corp.’s newspapers.

Search engines use automated robot programs to crawl the Internet and index sites. Online publishers can block these programs by including a file called robots.txt on the site.

Lou Gellos, a Microsoft spokesman, declined to comment. Jack Horner, a News Corp. spokesman, also declined to comment. Gabriel Stricker, a spokesman for Mountain View, California- based Google, also wouldn’t address the negotiations.

News Corp., based in New York, rose 3 cents to $12.01 at 4 p.m. New York time in Nasdaq Stock Market trading. Microsoft gained 32 cents to $29.94, while Google jumped $12.39 to $582.35.

Google’s news search drives traffic to publishers’ Web sites, and publishers can remove their stories from search results if they want, Stricker said in an e-mail.

Bing Volume

An exclusive agreement with News Corp. probably wouldn’t significantly increase Bing’s search volume, Sterling said. News Corp. may also be holding talks with Microsoft to try to pressure Google into making concessions, he said.

Google drives about 11 percent to 14 percent of traffic to News Corp.’s U.S. news sites, including Dow Jones, Fox News and the New York Post, according to Jeffrey Lindsay and Michael Nathanson, analysts at Sanford C. Bernstein & Co. in New York, who cited ComScore data.

Blocking Google could hurt News Corp., they wrote today in a report. The only way it would hurt Google is if all of the major newspapers and news outlets created a “watertight cartel” to block Google’s access to their sites, which is unlikely because it would probably prompt consumer complaints and regulatory scrutiny, they said.

They rate Google “outperform” and News Corp. “market perform.”

Microsoft has been holding meetings with publishers to discuss models for making money on the Internet, using the Bing search engine and the next generation of standards for protecting newspaper intellectual property on the Internet, one person said.

Make Money Online

This month, Microsoft representatives made a presentation at a meeting of the European Publishers Council, which includes the Financial Times, News Corp. and Axel Springer AG, according to Heidi Lambert, a spokeswoman for the council. Google didn’t attend, Lambert said. She declined to comment on what was discussed or who else attended, saying the meeting was private.

“The stakes are getting higher for everyone and the pressure is ratcheting up for newspapers to make money online,” Sterling said. “Then you have Microsoft trying to be creative and cunning in an attempt to grab market share.”

Separately, News Corp.’s MySpace social-networking site has a three-year, $900 million advertising agreement with Google that expires next year. MySpace’s revenue from the deal may fall short by about $100 million this year as traffic declines, News Corp. Chief Operating Officer Chase Carey said this month.

Google’s share of the U.S. online search market climbed to 65.4 percent last month, from 64.9 percent in September, according to ComScore, a Reston, Virginia-based research firm. Microsoft rose to 9.9 percent from 9.4 percent.

Discussions between News Corp. and Microsoft were reported earlier by the Financial Times.

To contact the reporters on this story: Sarah Rabil in New York at srabil@bloomberg.net; Dina Bass in Seattle at dbass2@bloomberg.net

Last Updated: November 23, 2009 16:14 EST