The talks are still at a very early stage and may not result in a deal, according to these people. Among the most thorny issues, one of these people said, are the terms under which Microsoft would compensate News Corp., if at all, to feature its news content, which ranges from The Wall Street Journal to the Sun of the U.K.
It isn't clear whether the talks include News Corp.'s non-newspaper sites, such as its popular MySpace social-network or Fox television properties.
The discussions are another sign of a growing push by news organizations to devise new revenue streams for their online news and information in response to the challenges posed by the Internet.
The Financial Times reported Sunday on its Web site the discussions between News Corp. and Microsoft.
While such a deal with Microsoft would be another way for News Corp. to get paid for its newspaper content, the company would risk losing a huge audience if its stories weren't available to Google users.
News Corp. executives have been among the most vocal proponents of charging consumers to read stories online. The Wall Street Journal already charges for online access to parts of its site, and News Corp. executives have said its other news outlets will follow suit.
Along with the Associated Press and other news organizations, News Corp. also has criticized Google and other big Web sites for using excerpts of their stories to link to the news organizations' sites.
Google and other Web portals say they are within their legal rights to post snippets of news stories, which help point traffic to news sites.
Gabriel Stricker, a Google spokesman, said Google has a "clear policy of respecting the wish of content owners" by allowing them to prevent their material from showing up in Google search results, though he declined to comment directly on the talks between Microsoft and News Corp.
"We believe search engines are of real benefit to newspapers, driving valuable traffic to their Web sites and connecting them with new readers around the world," Mr. Stricker said.
News Corp. and other news outlets have said they want major Web sites to pay directly to use their content, though the news organizations haven't necessarily been specific about how to do so.
Microsoft's efforts to become a bigger player in the search market and its deep financial resources have made it a potentially appealing alternative to Google for publishers looking for ways to charge for content.
The company is battling with Google SEO to better its position in the lucrative search market, and has steadily gained small amounts of market share since its launched a new version of its search engine, called Bing, earlier this year. Microsoft accounted for 9.9% of the U.S. search market in October, while Google had 65.4%, according to comScore.
Microsoft could enhance Bing as an online destination if it features a better selection of news content than Google. According to a person familiar with the matter, News Corp. initiated the conversations with Microsoft. The software giant has held conversations with other publishers as well, this person said.
The talks between the parties have included a possible plan to "delist" News Corp. stories from Google's massive search index, which means they wouldn't appear in search results on Google's site. Any Web site can prevent Google from indexing their site by including special commands in their Web pages.