Under the cover of launching a little-known feature, the social media giant has been funneling money to America’s biggest news organizations—and hanging the rest of the press out to dry.Getty Images/iStock
Over the past two decades, as Big Tech has boomed, news organizations have been going bust. Between 2004 and 2019, one in every four U.S. newspapers shut down, and almost all the rest cut staff, for a total of 36,000 jobs lost between 2008 and 2019 alone. Local newspapers have been particularly devastated, making it ever more difficult for people to know what is happening in their communities.
Many factors contributed to this economic collapse, but none more so than the cornering of the digital advertising market by the duopoly of Facebook and Google. Facebook’s threat to a free press—and, by extension, to democracy—is especially pernicious. The social media company is financially asphyxiating the news industry even as it gives oxygen to conspiracy theories and lies. As a result of its many roles in degrading our democracy, it faces mounting scrutiny by politicians and regulators.
Facebook has responded to the negative attention by creating a highly sophisticated public relations effort, which includes becoming the number one corporate spender on federal lobbying and engaging in a massive advertising blitz aimed at the D.C. policy audience. Less well known, and potentially far more dangerous, is a secretive, multimillion-dollar-a-year payout scheme aimed at the most influential news outlets in America. Under the cover of launching a feature called Facebook News, Facebook has been funneling money to The New York Times, The Washington Post, The Wall Street Journal, ABC News, Bloomberg, and other select paid partners since late 2019.
Participating in Facebook News doesn’t appear to deliver many new readers to outlets; the feature is very difficult to find, and it is not integrated into individuals’ newsfeeds. What Facebook News does deliver—though to only a handful of high-profile news organizations of its choosing—is serious amounts of cash. The exact terms of these deals remain secret, because Facebook insisted on nondisclosure and the news organizations agreed. The Wall Street Journal reported that the agreements were worth as much as $3 million a year, and a Facebook spokesperson told me that number is “not too far off at all.” But in at least one instance, the numbers are evidently much larger. In an interview last month, former New York Times CEO Mark Thompson said the Times is getting “far, far more” than $3 million a year—“very much so.”
Facebook has responded to negative attention by creating a highly sophisticated public relations effort, which includes becoming the number one corporate spender on federal lobbying and engaging in a massive advertising blitz aimed at the D.C. policy audience.
For The New York Times, whose net income was $100 million in 2020, getting “far, far more” than $3 million a year with essentially no associated cost is significant. And once news outlets take any amount of money from Facebook, it becomes difficult for them to let it go, notes Mathew Ingram, chief digital writer for the Columbia Journalism Review. “It creates a hole in your balance sheet. You’re kind of beholden to them.” It’s not exactly payola, Ingram told me, searching for the right metaphor. Nor is it a protection racket. “It’s like you’re a kept person,” he said. “You’re Facebook’s mistress.”
There’s no evidence that the deal directly affects coverage in either the news or editorial departments. Before the Facebook News deal, the Times famously published an op-ed titled “It’s Time to Break Up Facebook,” by Chris Hughes, a cofounder of Facebook turned critic. And since the deal, columns from Tim Wu and Kara Swisher, among others, have been similarly critical. In December, the editorial board welcomed a lawsuit calling for Facebook to be broken up.
And Facebook and Google money is, admittedly, all over journalism already. Virtually every major media nonprofit receives direct or indirect funding from Silicon Valley, including this one. When the Monthly gets grants from do-good organizations like NewsMatch, some of the funds originate with Facebook.
But these three points are beyond dispute.
First, the deals are a serious breach of traditional ethics. In the pre-internet days, independent newspapers wouldn’t have considered accepting gifts or sweetheart deals from entities they covered, under any circumstance. The Washington Post under the editor Leonard Downie Jr., for instance, wouldn’t even accept grants from nonprofits to underwrite reporting projects, for fear of losing the appearance of independence. Facebook, which took in $86 billion in revenue last year, is a hugely controversial behemoth having profound, highly newsworthy, and negative effects on society. Accepting money from them creates a conflict of interest.
Even for trusted news organizations whose audiences believe they can’t be bought outright, “it might come across as hypocrisy to heavily criticize an industry while also collaborating with them,” says Rasmus Kleis Nielsen, the director of the Reuters Institute for the Study of Journalism. Agreeing to keep the terms of the deal confidential is also a mistake, Nielsen told me. “This sort of opacity I don’t think builds trust.”
Second, these deals help Facebook maintain the public appearance of legitimacy. Journalists, critics, and congressional investigators have amply documented how Facebook has become a vector of disinformation and hate speech that routinely invades our privacy and undermines our democracy. For The New York Times and other pillars of American journalism to effectively partner with Facebook creates the impression that Facebook is a normal, legitimate business rather than a monopolistic rogue corporation.
Finally, these agreements undermine industry-wide efforts that would help the smaller, ethnic, and local news organizations that are most desperately in need of help. One such effort would allow the industry to bargain collectively with Facebook and other tech giants by withholding content from the platforms unless they received a fair price for it. But for that to work, small newsrooms would need the biggest and most influential companies to sign on. With those organizations receiving millions of dollars from Facebook through their own side deals, the smaller publications could be left stranded and defenseless.
If Facebook’s intent were to save American journalism, it would be making generous offers to smaller, local news organizations that do original reporting, Damon Kiesow, a professor at the University of Missouri School of Journalism, told me. By contrast, Facebook News “doesn’t really help anyone in the industry except for the small select group of outlets that get paid,” he said. “These efforts are all flavored with a strong dose of crisis communication and regulation avoidance.”
I f any major figure in the American media was going to say no to Mark Zuckerberg, it was Mark Thompson.
For most of his eight-year tenure as chief executive officer of the New York Times Company, Thompson was one of the industry’s most thoughtful, eloquent, and persuasive critics of Facebook and the danger it presents to journalism’s business models and essential role in a democracy.
“It makes my blood run cold, the idea of Facebook as a publisher,” he said at a June 2018 event convened by the Open Markets Institute. At a panel sponsored by the Tow Center later that month, he described that same affect when Zuckerberg “starts talking about how he thinks about community, and about what we trust.” Zuckerberg, he said, has a “terrifyingly naive perspective on news.”
During the OMI event, Thompson warned darkly about the “sinister” prospect “that Facebook’s catalog of missteps with data and extreme and hateful content” will lead it to try to “set itself up as the digital world’s editor in chief, prioritizing and presumably downgrading and rejecting content on a survey- and data-driven assessment of whether the provider of the content is ‘broadly trusted’ or not.”
Here was actual humility from the CEO of the paper of record: “Democracy depends in part on unbounded competition between different journalistic perspectives and the clash of different judgments and opinions,” he said. “History suggests that mainstream news organizations frequently get it right, but also that, not infrequently, it is the outliers who should be listened to.”
And he knew what needed to be done. An essential preliminary step was for Facebook and others to “engage with the collective industry bodies of the news business to arrive at shared principles both on the presentation and choice of news content, and on its monetization.” He called for “consistency and comparability in the treatment of news providers.”
This was not the language of shakedown. It was an impassioned and impressive philosophical argument about the survival of news—and democracy.
But then, all of a sudden, The New York Times and Facebook were making deals together. In October 2019, Facebook announced the launch of Facebook News, with The New York Times as a marquee paid partner, getting prime placement in a new vertical designated for “trusted” news sources.
What changed for Thompson between June 2018 and October 2019, such that the idea of Facebook picking which “trusted” news sources to pay went from sinister to “Sign here”?
“We always reserved our rights to do what we needed to do for our own business and to continue to fund our journalism in the interim,” Thompson insisted in a phone interview in March. “I’m a sort of pragmatist,” he said. “I don’t really see this as a conflict of interest or an issue of principle, it’s the real world.” He rejected the depiction of the payments as a gift or a payoff. “As far as I’m concerned, we were paid by a platform for access to our content.” Facebook, of course, does not pay The New York Times for access to its content when it is shared on regular newsfeeds.
And Thompson said that while he still thinks it would be sinister for Facebook to be making its own editorial decisions on a story-by-story basis, “Facebook making it easier for people to identify The New York Times and making it easier to access The New York Times is a good thing.”
What about his devotion to collective rather than individual action? It remains—in theory. “As it happens, I’m still very much in favor of broader agreements,” he told me. “Ideally,” he continued, such payments would be “not just available . . . to the handful of big players but broadly, in particular to local and regional journalism.”
So taking the deal wasn’t a betrayal of his principles, Thompson insisted. “I still fundamentally believe everything I said.” With any collective agreement years away at best, he said, “I don’t accept that our reaching it made it harder for the other publishers to get it—on the contrary . . . I don’t think you’ve got any evidence that a refusal to engage . . . would have helped them at all.” It actually sets a good precedent, he suggested. “It’s brilliant to have got a big digital platform to pay for the use of our content.”
But organizations that are favored by Facebook will obviously have different incentives going forward than those that are not. Unfavored outlets, if begging doesn’t work, may want to play hardball with Facebook to get their due—while the Timesand others will inevitably have qualms before blowing a hole in their budgets.
The Times spokesperson Danielle Rhoades Ha declined to address a long list of questions about the specifics of the relationship with Facebook, responding instead with general comments. “Quality journalism is expensive to produce and we believe quality publishers should be fairly compensated for creating valuable journalism,” she wrote in an email. The Times “does not disclose licensing and advertising terms,” she wrote, and “our licensing agreement with Facebook has no impact on our newsroom.”
Once news outlets take any amount of money from Facebook, it becomes difficult for them to let it go, notes Mathew Ingram, chief digital writer for the Columbia Journalism Review. “It creates a hole in your balance sheet.
Thompson stepped down as CEO in July 2020 and was replaced by his protégé, Meredith Kopit Levien, who may be even more committed to the deal than Thompson was. A few months after she took over, Levien expressed enthusiasm that Facebook had promised to create a space “for a particular level of quality news providers,” to pay the Times “a fair amount,” and to “feed your funnel.”
The Facebook News deal isn’t Facebook’s only, or first, inroad at the Times. The company already had a seat at the table—literally. The publisher and chairman Arthur Sulzberger Jr. installed the Facebook executive Rebecca Van Dyck on his 12-member board of directors in 2015. Van Dyck, who was Facebook’s global head of consumer and brand marketing at the time, now runs marketing for Facebook’s augmented and virtual reality labs.
Indeed, the Facebook News bounty might even be dwarfed by the undisclosed sum that Facebook is pouring into the Times’s new augmented reality efforts. The newsroom’s new “AR Lab,” a collaboration between Facebook and the Times, builds augmented reality filters and camera effects distributed on Facebook and Facebook-owned Instagram.
There are likely even more ties the public doesn’t know about. BuzzFeed News recently discovered that the Times columnist David Brooks had written a pro-Facebook blog post while on salary for a nonprofit partially funded by Facebook and hadn’t disclosed it to his current Times bosses or the readers.
T hompson would have been very much alone among his U.S. peers had he resisted Facebook’s inducements. He was also hardly the most enthusiastic Facebook partner—that would be News Corp. CEO Robert Thomson, who, after years of vituperative attacks on Big Tech, was grinning at Zuckerberg’s side at the Facebook News launch event and announcing a “new dawn” for journalists.
The rollout was undeniably a huge win for Facebook public relations. The Times story was headlined “Facebook Calls Truce With Publishers as It Unveils Facebook News.” What few negative headlines ensued were related to Facebook’s decision to include Breitbart, the far-right website known for spreading white-supremacist disinformation, among its cadre of “trusted” news sources—although, in Breitbart’s case, an unpaid one.
Months later, Joshua Benton, the director of the Neiman Journalism Lab, described the big downside: The Facebook News deal, he wrote, “lets them (1) pick the publishers they want to pay, (2) pick the amount of money they want to pay them, (3) get publishers to stop complaining, at least hopefully, and (4) get headlines like ‘Facebook Offers News Outlets Millions of Dollars a Year,’ in the hopes that they can stave off government regulation or taxation.” Facebook isn’t spending the money “because they think News Tab will be profitable,” Benton wrote. “It’s a way to solve a PR and policy problem.” The vaunted new product, he noted, consists of “a new tab buried so deep in Facebook’s interface you need a spelunker’s headlamp to find it.”
To collectively bargain with Facebook, small newsrooms will need the biggest ones to sign on. With those larger organizations receiving millions of dollars from the social media giant through side deals, the smaller publications could be left stranded and defenseless.
Facebook News only links to approved outlets, while in the actual News Feed, the algorithm spews out non-reputable clickbait based on what’s enticing the people, pages, and groups a user engages with the most. “The most notable thing about Facebook News is that it includes almost none of the stories that do well on the rest of Facebook,” observed the Nieman Journalism Lab editor Laura Hazard Owen.
Facebook is suspiciously evasive about how many people use Facebook News and how much traffic it generates for publishers, refusing to provide any indication of its scale at all. “We don’t have hard numbers,” the Facebook News spokesperson, Mari Melguizo, said when I asked for data on its performance. “It’s definitely grown and continues to grow. It is on an upward trajectory.”
Prior to Facebook News, the company had repeatedly proved to be an unreliable partner for news publishers. As Sarah Perez detailed for TechCrunch, the platform established an “Instant Articles” feature in 2015 that “restricted advertising, subscriptions and the recirculation modules publishers relied on” in exchange for a better user experience. It was a bad bargain, and, as a result, many outlets abandoned the feature. Facebook promoted a “shift to video” in 2016, but inflated its video use metrics and then refused to pay publishers. This prompted layoffs at many companies, including Vox, Vice, and Mic. Shortly before Facebook News launched, Joanne Lipman, a former editor in chief of USA Today, warned her colleagues that they had “been at the beck and call of these behemoths” for too long.
“I think it’s a dangerous situation for news organizations to count on anything when it comes to Facebook,” the Northeastern University journalism professor Dan Kennedy says. To Kennedy, Facebook lost any pretense of morality when, having tweaked its algorithms after the November 2020 election to favor authoritative news sources in the News Feed, it switched back—presumably to boost engagement, to placate right-wing publishers, or both. “You pull all this together, and Facebook is just the worst possible partner,” Kennedy says.
The world watched an extraordinary exercise of Facebook’s massive power in February when it stymied an Australian government attempt to force it to pay to link to news. First, Facebook temporarily banned Australian news sites from its platform. Then it did an end run around the regulators by agreeing to arrange multimillion-dollar deals with major news providers—on its terms, not the government’s. Facebook’s head of news partnerships, Campbell Brown, described it as “an agreement that will allow us to support the publishers we choose to.” In Australia, the biggest recipient by far of Facebook’s largesse will be Rupert Murdoch’s News Corp, which owns most of the country’s newspapers. News Corp also heavily lobbied for the new legislation. Facebook didn’t pay the country’s smaller outlets.
“In the end, Google & Facebook have a big bucket of baksheesh that will go to old proprietors and their shareholders,” Jeff Jarvis, the director of the Tow-Knight Center for Entrepreneurial Journalism at the City University of New York, tweeted in February.
As Facebook News continued to roll out across the globe in 2020 and 2021, someone did finally tell Facebook no. The German media giant Axel Springer rejected Facebook’s offer, describing it as both unseemly and insufficiently lucrative: “We consider the efforts of several platforms to become news brands themselves while at the same time compensating some publishers with inappropriately low remuneration for their content as problematic,” a spokesperson said. The company is now holding out for the passage of new copyright laws in Europe that it hopes will create revenue-sharing agreements “in which all publishers can transparently participate and receive reasonable compensation.”
Meanwhile, in the U.S., Facebook’s need for allies in the press has taken on a particular urgency. In October 2020, a House judiciary subcommittee released a bold, agenda-setting report, alleging wide-ranging antitrust violations by Google, Facebook, Apple, and Amazon. In December, the Federal Trade Commission and 46 state attorneys general, as well as the attorneys general for D.C. and Guam, brought an antitrust lawsuit against Facebook, alleging that the company is illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct.
Congress is currently holding hearings on the bipartisan Journalism Competition and Preservation Act of 2021, which would give news organizations of all shapes and sizes the ability to negotiate collectively with the big platforms. At a March 12 hearing, News Media Alliance CEO David Chavern noted that the larger media companies already have leverage with Facebook and others. “The ones most in need of collective action are small and community publishers, including most particularly publishers of color, who are suffering deeply in this broken marketplace for real quality journalism,” he said.
HD Media, which owns several West Virginia newspapers, filed a federal antitrust lawsuit against Google and Facebook in January, seeking damages from the duopoly. The suit charges that Google’s monopolistic control of digital advertising, along with a secret deal with Facebook not to compete against it, had strangled their source of revenue.
In the long run, reformers say, it will be necessary to break up the giant platforms, end their stranglehold on advertising dollars, and ban algorithms that incite outrage or even violence. In the nearer term, however, some observers support the idea of an independent journalistic fund, financed by Big Tech but operating at arm’s length, that could reward news organizations according to the resources they put into their reporting and the value they contribute to their communities.
Some sort of trusted intermediary or collective agreement seems necessary, because it’s hard to see direct handouts as anything more than a corrupt stopgap measure—especially when they’re mostly given to the news organizations that need the money the least. As Doug Reynolds, the managing partner for the West Virginia newspapers suing Facebook and Google for damages, told me, “If the future of this industry is that we’re dependent on their goodwill, then we don’t have an independent press anymore.”
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Dan Froomkin publishes independent political-media criticism at Press Watch (presswatchers.org). He has previously held senior editorial positions at the Intercept, HuffPost, and the Washington Post, where he also wrote the White House Watch column for six years. This article was produced in association with the Open Markets Institute's Center for Journalism & Liberty.