Is Facebook Buying Off The New York Times? UNDER THE COVER OF LAUNCHING A LITTLE-KNOWN FEATURE, THE SOCIAL MEDIA GIANT HAS BEEN FUNNELING MONEY TO AMERICAS BIGGEST NEWS ORGANIZATIONS--AND HANGING THE REST OF THE PRESS OUT TO DRY.

• Author: Froomkin, Dan

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."

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...