News Corp.'s Challenge to GoogleBy
In a bid to loosen Google's dominance over online news, News Corp. (NWS) Chief Executive Rupert Murdoch is talking with Microsoft about making his company's content available exclusively through the software giant's Bing search engine. But any deal to keep stories from The Wall Street Journal and other papers out of Google search results could do more harm than good for Murdoch and Microsoft.
Murdoch is considering a pairing with Bing because he believes Google benefits at the expense of his own media outlets. He argues readers often scan story excerpts on Google News without clicking through to newspapers' Web sites, robbing them of ad revenue. But acting alone, News Corp. may not have much impact on Google's share of the search market, 65.4% in October. Murdoch would likely need substantial backing from other newspapers. "It would take a great proportion, most all of the industry, to do something together," says Jim Moroney, executive vice-president of A.H. Belo, publisher of The Dallas Morning News, which is also considering giving a single search engine access to its news. Google has said any Web site can opt out of search results by adding a line of software code to its pages.
But regulators might look askance at publications acting in concert to dump Google. "This would raise significant antitrust issues because competitors would be agreeing to limit their competitive conduct in an important respect—delivery of their service to the public," says Sam Bayard, assistant director of Harvard's Citizen Media Law Project. Representatives of News Corp. and Microsoft refused to comment on the prospect of a deal.
As part of the proposed plan described by insiders, Microsoft (MSFT) would pay a fee in exchange for making Bing the only search engine able to deliver content from the Journal and possibly other News Corp. media. Regulators may consider those payments an attempt to trammel competition in the lucrative online search market, says David Balto, a senior fellow at the Center for American Progress and a former antitrust official with the Federal Trade Commission. "That kind of exclusionary practice will certainly catch the attention of the antitrust cops," Balto says. "It's depriving consumers of choice." He says the moves would be reminiscent of now-outlawed agreements that made Microsoft's Windows the sole operating system available on whole fleets of computers in the 1990s.
Another risk is that walling off WSJ.com and other publications from Google would slash traffic to News Corp. sites and make the company beholden to Microsoft to compensate for any decline in advertising. "Being dependent on a giant company for a large share of your revenue is very shortsighted," says David Hallerman, senior analyst at researcher eMarketer. Google accounts for 26.3% of traffic to The Wall Street Journal alone, according to data tracker Experian Hitwise. Some analysts say Murdoch may be talking tough now to get a better deal from Google to supply advertising on News Corp.'s MySpace.
If he really wants to lead newspapers away from Google, Murdoch would have to persuade other media outlets to stomach an immediate decline in online readers. Most of the members of the Newspaper Association of America rely on Google for about 30% of their online traffic, says Randy Bennett, senior vice-president of business development for the industry group. They would "think long and hard before they just move their listings wholesale to Bing."