The world is finally waking up to the full implications of Google’s business, and they’re not all pretty.
Leading the rebellion is News Corp. CEO Rupert Murdoch, who is threatening to keep his newspaper content beyond the reach of Google searches. Murdoch wants to keep Google from reaping so many of the financial benefits of advertising placed adjacent to News Corp. content. He’s being aided and abetted by Microsoft.
In a scenario under consideration, Microsoft would pay News Corp. for making articles from The Wall Street Journal and other Murdoch-owned publications searchable exclusively through Microsoft’s Bing search engine. If the effort encourages other powerful content providers to demand compensation from Internet companies that generate revenue from online ads, the Murdoch-Microsoft partnership could create a big problem for Google.
Search is not Microsoft’s core business, but it generates a lot of tech industry revenue — and funds Google, Microsoft’s No. 1 competitor. So the best play for Microsoft in the Web search market could be to diminish the revenue stream for everyone involved. If Microsoft could reduce the overall market value of Web searches, it could protect its own software revenue while hurting Google.
Changing the Economics of Search
Blogger and entrepreneur Jason Calacanis recently suggested a strategy whereby Microsoft could gain search market share by paying content providers more than they’re getting from search referrals.
Google’s threat to Microsoft and other software and telecom companies is manifold. Google is competing not only in search engine software, but also in mobile phone services, personal navigation, and operating systems.
In concept, it wouldn’t be especially difficult for Microsoft to change the economics of the Web search market, as long as the company can tolerate losses. Microsoft could take advertising revenue generated by Bing and pass it along to media providers, in return for exclusive arrangements to make their content…
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