David Prosser: Hit Google where it really hurts

Outlook: The world's news organisations produce around 5 per cent of the top results in a typical Google search
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The Independent Online

One wouldn't normally class either NewsCorp or Microsoft as Davids in a battle against a Goliath. Yet that would be a fitting description for both in the context of their respective campaigns against Google. Might, then, an alliance give the pair a chance to take on the search giant?

NewsCorp is furious that Google pays it not a dime for the content it skims from its global publishing empire, while Microsoft is fed up with seeing its own search engine service, relaunched earlier this year as Bing, so comprehensively outgunned. But what if Microsoft were to pay NewsCorp for displaying its content on Bing, on the understanding that the publisher then prevents Google from linking to any of its work?

It could be a win-win. NewsCorp finally starts getting paid when its content appears on a search engine, while Microsoft damages the quality of the search results produced by Google. Assuming internet users choose a search service on the basis of which one delivers the most comprehensive – but useful – results, Bing would get an edge.

This is not a perfect solution. We don't know how much Microsoft would pay NewsCorp for dumping Google, but it's going to have to be a fat cheque to compensate for all the traffic NewsCorp's sites currently get from the latter but would stand to lose. Google's lead over Bing is so marked that advertisers currently paying NewsCorp for online readers would want to see lower rates.

As for Bing, NewsCorp content is a drop in the ocean of all that is available online – many Google users will not even notice it has gone. And if Bing were to promote NewsCorp content more aggressively than search results for which it has not paid – which may be part of the deal – it could find the integrity of its own product questioned.

Still, an alliance with Microsoft is the first sign that all NewsCorp's talk of moving to a pay-model for online publishing has a credible business model underlying it, though allowing free access to content on Bing would presumably undermine its own efforts to charge readers.

Moreover, if NewsCorp can do this sort of deal, so can rival publishers. The world's news organisations produce around 5 per cent of the top results in a typical Google search. Depriving Google of that content would not be a killer blow, but it would be a nip at the heels that the elephant would notice.

As the endgame for NewsCorp – and most other news publishers – is not to get rid of Google altogether but to drive it to the negotiating table, a nip is what needs administering. Bing might in time find itself forced to play second fiddle to Google once again, but in the short term, Microsoft's search engine could be a vital weapon for online publishers.

Banks enjoy new payday

Worried about banks' profits given tomorrow's Supreme Court ruling on unauthorised overdraft charges? If you're anxious that an adverse ruling for the banks could cost it billions in compensation – okay, it's probably the opposite scenario you fear more – take some comfort from this statistic: the average UK standard variable mortgage rate is now 4.7 per cent.

Not a bad profit margin given that the Bank of England's base rate has been at the historically low level of 0.5 per cent since March. Indeed, that margin has almost doubled compared to a year ago. The 4.2 percentage point differential between SVRs and base rates compares to 2.68 percentage points this time last year.

There was a time when SVRs were less important. When lenders were competing aggressively for business, few borrowers moved on to their mortgage provider's SVR, opting instead to remortgage elsewhere. But as those deals dried up, and SVRs fell with base rates, more borrowers have stayed put.

The retail divisions of our biggest banks are often seen as the poor relations of their investment banking counterparts. But there aren't many businesses where you can get away with subjecting customers to quite such blatant margin increases.

Cameron's prudence may yet backfire

First, the embarrassment of France and Germany beating the UK out of recession. Then the G7 escaped too, followed by the eurozone. Now the OECD says growth has, on average, returned across its 30-strong country membership. Back home, we remain stuck in negative territory.

It was against this backdrop that the political leaders of all three major parties arrived at the CBI's annual conference yesterday, courting the approval of the business community. Leaving Nick Clegg aside – let's just say he fell a little flat – one would imagine that Gordon Brown had more to gain than David Cameron. The Tory leader, after all, merely has to make the international recession comparison to score a point or two.

Mr Brown does, however, have one advantage. One of the responsibilities of government is to lay out clear and detailed plans in advance. By contrast, the Conservatives have yet to offer a roadmap for their own economic policy, except in such a large scale as to be of little use. While Gordon Brown is a known quantity, Mr Cameron has much to prove.

In that sense, the Conservatives' determination to look tougher than Labour on cutting borrowing may be dangerous. Though Mr Cameron has tried to soften the message with talk of an emergency budget for growth, he runs the risk of being painted as a leader obsessed with debt rather than economic recovery.

The Prime Minister will have been delighted by the most heavyweight contribution of all at the CBI yesterday, in which the IMF boss Dominique Strauss-Kahn warned that it was too early for governments to begin withdrawing fiscal stimulus packages. Mr Brown now has some international comparisons of his own with which to return the Tories' fire.

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