When Exclusivity Is Pro-Competitive...

Microsoft and News Corporation (“News Corp.”) are reportedly in discussions for a deal where News Corp. would sell its online content to Microsoft for inclusion in its Bing Internet search engine.  As part of the deal, News Corp. would delist its articles from Google’s search engine and list them exclusively with Bing.

In a curious twist of fate, Microsoft’s exclusive with News Corp is likely pro-competitive.  Microsoft has slightly less than a ten percent share of the online search market, and this type of arrangement could enhance its ability to compete with Google.  Microsoft hopes to attract users to its Bing search engine by becoming the exclusive search destination for News Corp’s popular online publications including the Wall Street Journal, the New York Post, The Times of London and others.

Although News Corp. would benefit by earning revenue for its Internet listings, most analysts view the venture as risky and do not believe News Corp. will consummate the deal.  News Corp. would be isolating its content from Google’s sixty-five percent share of all search inquiries which would likely lead to a drop in viewers of its web content. Google alone accounts for 26.3% of the Wall Street Journal’s traffic, according to data tracker Experian Hitwise.

Negotiating fees from search engines may be a new strategy for content providers due to the weak online advertising environment.  Google currently pays publishers for content but only on a limited basis. For example, Google pays The Associated Press to publish the text of its articles.  The Microsoft overture could be Rupert Murdoch’s way of pressuring Google for a deal or at least to start a bidding war between Google and Microsoft.

Whatever the case, if the deal goes through web searching could change if Microsoft persuades content providers to give it exclusive search engine rights.  Today, one can use any search engine and be fairly confident that it will generate the major sites that are on offer.  If exclusivity for critical content emerges as the new paradigm, we will see search engines driven by business partnership and consumers may need to run searches across multiple engines to ensure complete results.

So far representatives from both Microsoft and news are calling the proposal mere “rumors and speculation.”

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