Facebook (FB) Expands News Tab Internationally With UK Launch
Facebook FB recently rolled out Facebook News tab for users in the United Kingdom (UK), expanding internationally post its launch in the United States in 2019. Facebook News is set to arrive soon in Germany, France, India and Brazil.
The Facebook News section will feature a mix of top stories chosen by curators employed by the news aggregator service, Upday, alongside other stories chosen algorithmically to reflect a user’s interests.
As of 2020, Pew Research Center reported that American adults who go to social media for news was 55%. More specifically, over 71% of adults were active on Facebook, and about 52% drew at least some news from the social platform.
Markedly, Facebook’s shares have returned 29.5% in the past year, compared with the Zacks Internet - Services’ rally of 32.3% and S&P 500’s rise of 19.7%.
One Year Performance
Facebook Encourages Paying Publishers in the UK for Content
Facebook will pay mainstream UK news outlets millions of pounds a year to license their articles, as the social network faces the threat of a government crackdown on its dominance in online advertising.
The company had announced the launch of Facebook News in the UK in November, suggesting it would feature content from media partners including Conde Nast, Hearst, The Economist, and Guardian Media Group.
In addition to the already-inked deals, new partner additions for Facebook News include Channel 4 News, Daily Mail Group, DC Thomson, Financial Times, Sky News and Telegraph Media Group among others.
The deal, which will earn leading publishers millions, will be a financial boost as they have struggled with sluggish advertising revenues and print sales since content has moved online and become available for free, forcing a host of titles to close.
This Zacks Rank #3 (Hold) company’s move can be seen as a strategic play aimed at discouraging wider international regulation of the news media market by showing that it is prepared to support local publishers without government intervention. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Markedly, Facebook has stated that over 95% of the traffic Facebook News delivers to publishers is incremental to the traffic they already get from News Feed.
Facebook Follows Google’s Footsteps
In the recent months Facebook and Alphabet’s GOOGL Google have stepped up efforts to help news organizations, following criticism that their dominance of online advertising has made it difficult for media to profit from digital operations.
It comes as Australia moves ahead with a proposed news media bargaining code, which would force tech companies to enter into negotiations for payment for content or face third-party arbitration if they cannot reach a deal.
Meanwhile, the EU copyright directive threatens a similar scenario across Europe. Last week, Google signed a deal to pay French publishing companies and news agencies for their content. The agreement comes after several months of talks between Google France and the media groups, which are represented by France’s Alliance de la Presse d’Information Generale lobby.
Google will negotiate individual licenses with members of the alliance that cover related rights and open access to a new mobile service from the company called News Showcase.
Facebook News Expansion to Intensify Competition
The rapid introduction and expansion of news services from tech giants like Facebook, Google and Apple AAPL has intensified competition in the digital as well as traditional news market.
Apple News is still only available in a few countries but is accessed by 29% of iPhone users in the United States and 22% in the UK. Apple News launched personalized and curated local news in select cities in the United States. Additionally, the company rolled out Apple News+ audio, with professionally narrated versions of feature stories available to Apple News+ subscribers.
However, last year, Apple News lost a major publisher, the New York Times NYT, which claimed that Apple’s partnership did not give it enough of a direct relationship with subscribers to justify continuing relationship.
Nonetheless, giving news a separate feed is expected to bolster Facebook’s reputation as a responsible platform in an era of unreliable sources besides its regulatory concerns.
Moreover, Facebook’s director of news partnerships in Europe, Jesper Doub, confirmed that France and Germany were next in line for Facebook News although no launch dates were specified.
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