We have a website made in asp.net with razor engine. The razor engine encodes the content from source/database. So, for example, the letter ö becomes
ö if I look at the source code in the browser.
Does it affect search engines in any way?
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No. Such encoding is standard web development and plays no part in SEO. If anything, I would think it would help since it properly defines such letters—in which case I guess it might play a part in SEO—just to contradict myself.
Search engines know how to decode and index text with HTML entities.
ö and ö both get indexed properly as the letter
The only drawback to using HTML entities for such characters is the size of your source code. If you use a lot of such characters, it can significantly increase the byte count of your pages. Only a few characters need to be escaped to their html entities:
< > & " '. Other characters can be written into the page verbatim as long as the character set allows it. If you use
UTF-8, it supports all international characters natively without entity encoding.
There's an unnecessary fear among webmasters for using or not using certain elements on the website as it may affect their rankings. First of all, I would like to tell you that unless you are not trying to fool your users and working on delivering them the information they need in the easiest possible way, Google won't mind which HTML, CSS or PHP codes you are using.