Facebook CEO Mark Zuckerberg ended a busy week on the East Coast on a much lighter note than it started.
At an event in New York City Friday celebrating the launch of Facebook's News Tab, Zuckerberg struck a jovial tone with reporters and News Corp CEO Robert Thomson, a former critic of the company who interviewed him on stage. The upbeat event followed a six-hour hearing on Wednesday in front of the House Financial Services Committee, where Zuckerberg was interrogated over Facebook's new cryptocurrency libra project and berated for his lack of answers to civil rights questions about his platform. A day earlier, a state-led antitrust probe of Facebook announced that attorneys general from 47 U.S. states and territories are now part of the investigation.
Forging a new alliance with the news media industry is a savvy distraction from Facebook's many challenges in Washington. The company has failed to gain back the same confidence in its business from lawmakers as it has from investors after a series of privacy scandals unfurled last year. (Its stock is up 43% in 2019.) Facebook currently faces as many as four antitrust probes: from the state AGs, the Federal Trade Commission and the House Judiciary Committee. The Justice Department is also looking into the company, according to Reuters, which Facebook and the DOJ have not directly confirmed.
The News Tab initiative marks a huge shift in Facebook's approach to the media industry, which has long lamented the decline in advertising revenue through the tech revolution that has ultimately shuttered many publications. With the launch of the News Tab, Facebook will now pay publications for their content through multi-year commitments. About 200 of publishers, including News Corp-owned Wall Street Journal and CNBC parent company NBCUniversal, have already signed on. An independent team of journalists will curate the stories that appear in the feature, according to Facebook.
Some may wonder why Facebook would now choose to start paying for content that is already being posted to its service for free. Facebook has absorbed years of scolding from the media industry for its role in driving profit away from their own websites and allegedly inflating video metrics that had helped reshape the industry.
Facebook likely has reasons beyond its business model for launching the News Tab. Zuckerberg has made free speech, and perhaps by extension, free press, a cornerstone of his philosophy. In a speech at Georgetown University last week, Zuckerberg defended his controversial decision to refrain from fact checking ads by politicians and said he believes keeping political advertising on Facebook is important even though, "From a business perspective the controversy is not worth the very small part of the business that they make up."
But it's also impossible to separate Facebook's new direction on news content from the intense scrutiny the company is receiving from both D.C. officials and the press. Facebook declined to comment, but pointed to Zuckerberg's recent statements and writings on the News Tab and journalism in general.
Here are some of the reasons Facebook's launch could prove to be a savvy move.
The fact that Thomson, the News Corp CEO, aligned himself in such a public way with Zuckerberg is in itself a win for Facebook. News Corp, which previously called for Facebook and Google to pay media companies for their content, is now one of several businesses that will in fact be paid by Facebook for its work. Facebook and its media partners haven't disclosed how much the deals are worth, but various reports have said some publications will get millions for a three-year deal.
The strategy for Facebook may be characterized as something like "keep your enemies close." That could mean creating good will with the journalists who cover the company. But, perhaps at least as important, it also means mollifying the media trade groups that have lobbied against Facebook and Google.
"The project itself, the News Tab and the reported deal structure around it, I think are all fairly positive steps," said Jason Kint, CEO of media trade group Digital Content Next, of which CNBC is a member. But, he said, this step alone doesn't change the big picture.
David Chavern, President and CEO of the News Media Alliance, echoed Kint's remarks in a statement. Chavern, whose group represents a coalition of publications, said the News Tab is "a good start," but "far from a comprehensive solution."
The lawmakers investigating Facebook have taken an interest in their relationship with the news media industry.
Two of the leaders of the House Judiciary's Facebook probe introduced a bill in April that would create a safe harbor for online content publishers to jointly negotiate "with dominant online platforms regarding the terms on which their content may be distributed." Those leaders are Antitrust Subcommittee Chairman David Cicilline, D-R.I., and Georgia Rep. Doug Collins, the top Republican on the House Judiciary Committee.
Facebook is clearly aware of these lawmakers' interest in their dealings with the press. The launch of the News Tab could be an attempt to preempt the negotiations for which the bill would allow, or simply show Facebook is willing to change its ways without new legislation.
Facebook may also be playing a game of comparison with Google, which has received at least as much antitrust scrutiny in recent months. Google faces an antitrust probe from the House Judiciary Committee, attorneys general from at least 50 states and territories as well as a reported probe from the DOJ. The company has long been embroiled in competition complaints filed with regulators around the world, most notably in Europe.
Given the longstanding critiques of Google, it would be wise for Facebook to mark some clear distinctions from the company in the way it does business. Facebook is routinely lumped in with Google, Amazon and Apple in the catchall of "Big Tech," so a move like the News Tab launch could help set it apart.
If that is part of Facebook's goal, there are some signs that it could be working. In contrast to Facebook, Kint said, Google has threatened to remove its news product from Europe when policymakers proposed a copyright directive that could force the company to pay to display snippets of media outlets' work.
We've worked for many years to be a collaborative and supportive technology and advertising partner to news publishers worldwide," a Google spokesperson said.
"Facebook just leapt past Google in terms of respect for the association and with news brands paying for high quality, trusted news," Kint said.
Chavern, the News Media Alliance executive, said in his statement, "We also hope that Google will follow suit and work to create a more comprehensive solution for news on its platform — instead of actively fighting news publishers around the world."