Facebook’s CEO Mark Zuckerberg has directed his company to tamp down on fake news on its site. Part of that process includes hiring expensive fact checkers to read through posted material, and then attempt to find evidence that verifies the claims made in the stories. Facebook is willing to spend the money because it wants to avoid being labeled a media company, which would come with expensive requirements regarding truth in advertising and publishing PSAs. The Financial Times reports:
But the more Facebook becomes involved in policing content on its services, the greater the risk that it will alienate users or potential advertisers.
“No one at Facebook has ever admitted they are a media company, because that will have an impact on how they are treated in US law,” says Prof Howard. “If they are considered a media company and are taking money for placement of advertisements, then they are responsible for truth in advertising and have to dedicate budget to public service ads, like all other media companies do.”
With the group’s profits reaching $10bn last year and the stock up 30 per cent this year, the recent controversies have had little impact on investor sentiment. “Investors are not necessarily social critics,” says Brian Wieser, an analyst at Pivotal research.
Facebook users spend an average of 50 minutes a day using its apps, Facebook, Instagram and Facebook Messenger. But what if efforts to expose people to other political views result in lower engagement? The group’s algorithm is designed to keep users on the site so it can show them more advertising. But that does not necessarily fit with its new aspirations to help readers find an accurate source of information.
“What [are] the commercial consequences? How much is he willing to sacrifice revenue in order to solve the problem? That is the fundamental question he does not address,” says Mr Kirkpatrick.
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Jeremy Jones, CFA
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