News Corp. CEO on Fake News, ‘Digital Duopoly’ and What Role Advertising Plays in All of It

    by Robert Thomson
    April 3, 2017
    Creative Commons image.

    The following is an edited transcript of a speech News Corp. CEO Robert Thomson gave recently at the Asia Society in Hong Kong. It’s a guest post posted here with permission. The title of the talk was: “The Fake, The Faux, The Facts, The Future.”

    It’s definitely an opportune moment to grapple with the fake and the faux, the flawed and the fallible — these are real issues and have been for a decade or more, but the faux has suddenly become real because the full scale of the changes wrought upon the integrity of news and advertising by digital platforms has become far more clear. The digital duopoly has rewritten the rules in a way that has written much journalism and integrity out of the script.

    Google’s commodification of content, which knowingly, willfully undermined provenance for profit, and then followed by the Facebook stream with its journalistic jetsam and fake flotsam, have created an ecosystem that is dysfunctional and socially destructive.


    Both companies could have done far more to highlight that there is a hierarchy of content, but, instead, they have prospered mightily by peddling a flat earth philosophy that doesn’t wish to distinguish between the fake and the real because they make copious amounts of money from both – for them, free content has been free money.

    And depending on which source you believe, they have about 80 percent of the digital advertising market and, per one interactive advertising bureau related estimate, well over 90 percent of the incremental increase in advertising over the past year. The only cost of content for these companies has been lucrative contracts for lobbyists and lawyers, but the social cost of that strategy is far higher, as is becoming painfully and thankfully clear. It is risible, no, no, no, beyond risible, that Google/YouTube, which has earned, literally, hundreds of billions of dollars from other peoples’ content, should now be lamenting that it can’t possibly be held responsible for monitoring that content – monetizing yes, monitoring no. But, it turns out that free money does come at a price.
    Obviously, we all have to work with these companies, to a gradual lesser extent, and we are hoping, mostly against hope, that they will finally take meaningful action, not only to allow premium content models that fund premium journalism, but also purge their sites of the rampant piracy that undermines creativity. Your business model can’t be simultaneously based on both intimate, granular details about users and no clue whatsoever about rather obvious pirate sites.

    These are polarized and polarizing times, and this is certainly not intended to be a political treatise or per se a critique of the media – I’m still a reforming editor, having been escorted away from the editor’s desk at the Wall Street Journal to the chief executive’s desk. A desk that is, of course, in a resolutely trendy open plan office. But when outside America it is always worth reminding audiences that so much of the coverage of America is a caricature of America, and that has long been the case. And so when a larger-than-life character like Donald Trump becomes President, you do have a compounding effect. I travel for work a fair amount and it is fascinating to see, for example, the apoplexy in, say, the U.K. about the U.S. at present. Clearly there is transition, even upheaval – that’s readily narrated most minutes of most days – but, abroad, externally, there is also a confirming of preconceptions, if not prejudices, about America that is itself unhealthy.


    Creative Commons image.


    Book recommendations

    One of my responsibilities, or pleasures indeed, is to oversee HarperCollins, the world’s best book publisher, and so I am often asked, presuming literacy, what books I would recommend on this or that subject. There are two books I would suggest reading if you want a deeper understand of the pre-conditions that have carried contemporary America to its current place.

    Firstly, Coming Apart by Charles Murray, which HarperCollins sadly didn’t publish. The semi-rhetorical question now asked is, ‘who on earth could have predicted the outcome of the election?’ Actually, Charles Murray predicted the outcome five years ago. Coming Apart explains, statistically, how the lack of shared experiences, economic, social, spiritual, has created a consciousness conflict – emptying out empathy from many communities. It’s not just a frustration at missed opportunities, but also a concern at the erosion of values and status, and the poverty of educational opportunity, leading to a lack of mobility. As the son of a barman in a pub in rural Australia, northern Victoria, in what we Australians call the bush, it’s hard not to be acutely conscious of inequality. But an even more profound cause of the fraying of the social contract is a lack of mobility. And, by the way, if you do stop by my birthplace, Torrumbarry, make sure you do have a cooling, calming glass of amber nectar in the pub.

    The other work that has become a particular hit in the post-election period, as the coastal elites try to understand how the rest of the country wasn’t in seamless sync with their self-centered sensibility, is Hillbilly Elegy, by JD Vance, a work we thankfully did publish, and which was much discussed on election night itself. It thoughtfully captures the sense of journey from rural to industrial and that frayed social fabric. It is interesting that the author wrote recently that he wants to return to his roots because the exodus of the talented and motivated has cratered a community that is struggling to find role models and mentors in its midst.

    The continuing, if now swirling currents of globalization still prevail – there are of course parochial passions – but, in terms of investment flows and tourism, globalization is still a powerful, commercial and cultural force. And then there is digitization. Saturation point for digitized experiences cannot be too far away. We are theoretically far better informed than we were and yet that is a questionable proposition. We do seem to have disappeared up the vortex of our verticals. It’s certainly not the preserve of one particular segment of the political spectrum, but social media has become more anti-social and the algorithms lack rhythm.

    And there is, as we’re discussing today, certainly, belatedly, a focus on fake news and fraudulent advertising – and another area that clearly needs much attention is those algorithms that Silicon Valley companies and Amazon routinely cite as a supposedly completely objective source of wisdom and insight – and yet they also blame algorithms and not themselves when neo-fascist content surfaces or when a search leads to a skewed results and higher prices (that would be Amazon) or to hopelessly obviously biased results in favor of its own products (that would be Google).

    It really is time to pay more attention to these algorithms, which are clearly set, tuned and adjusted by the companies to suit their own interests and are far from being objective. When a digital company next blames the autonomous, anarchic algorithm for this or that indiscretion, please mock them mercilessly.
    They naturally love the idea of outsourcing responsibility and insourcing money. These are cool, cutting edge companies and their very coolness has sucked in the susceptible. As G.K. Chesterton said: “Fallacies do not cease to be fallacies because they become fashions.”

    Let’s, for example, look at how Google games the searches for its own products – an independent assessment found that in 25,000 random Google searches, ads for Google products appeared in the most prominent slot 91 percent of the time. How on earth is that not the unfair leveraging of search dominance and the abuse of the algorithm? All 1,000 searches for “laptops” started with an ad for a Chromebook – that is 100 percent of the time. Candidly, Kim Jong-un in North Korea would be envious of results like that at election time.

    And then there are the recently launched Google snippets, which stylistically highlight certain search results as if they were written on stone tablets and carried down from the mountain. Their sheer visual physicality gives them apparent moral force. Of course they, too, are the result of algorithm tweaking and tugging, and so when you type in the eternal question: “Is Google a monopoly” you get the eternal answer elevated in semi-transcendent type:

    Oh ye of little faith, how could you have doubted the digital deity.

    The word Orwellian is flagrantly used and abused. But when it comes to the all-powerful algorithms of Google, Amazon and Facebook, otherwise known as GAF, Orwellian is unused. The institutional neglect has now left us perched on the edge of the slippery slope of censorship. There has been no tradition, as there is at great newspapers, of each day arguing over rights and wrongs, of fretful, thoughtful agonizing over social responsibility and the freedom of speech.

    Facebook will no longer allow developers to use data for surveillance purposes. Photo by chriscorneschi on Flickr and used with Creative Commons license.

    What we now have is a political backlash with which these omnipotent companies are uniquely ill equipped to cope. Their responses tend to be political and politically correct. Regardless of your own political views, you should be concerned that we are entering an era in which the two most powerful news publishers in human history, and I say that again, the two most powerful news publishers in human history, are going to routinely and selectively “unpublish” certain views and news. The obviously grotesque is obvious, but the arguably wrong may be right.

    And we stumble into this egregious era at a moment when the political volume in many countries is turned to ten. The echo chamber has never been larger and the reverb room rarely more cacophonous. It’s not just what is said, but how it is said. In a world of fruity, voluminous views – the temptation is to amp and ramp up the volume to be heard above the fray, which itself is fraying the social fabric. This is not an entirely new trend but it also has compounding effect with a combination of “holier than thou” and “louder than thou”…hollowing out with the industrial concern of a decade ago, hollering out should be a concern now.
    Curiously, this outcome is a result, in part, of the idealism of the Silicon Valley set, and there’s no doubt about the ideals; it devoutly believes it is connecting people and informing them, which is of course true, even though some of the connections become conspiracies and much of the information is skimmed without concern to intellectual property rights. The dangers of idealism were understood by Adam Smith, who was not the theoretical barbarian of legend, but a thoughtful muser on matters economic, social and much more: “virtue,” he said, “is to be feared far more than vice because it is not subject to the constraints of conscience.” In other words, the idealist can quickly become the ideologue.
    Ideas aside, we were supposed to be in a magic age of metrics of both dayta and data. You say tomato, I say dayta. And yet instead of perfect precision we have the cynical arbitraging of ambiguity – particularly in the world of audiences. Facebook recently said that it had a problem with four of its metrics, only four of 220 metrics, and those four were: the weekly and the monthly reach of marketers’ campaigns; the number of video visits; and the time spent reading articles. Honestly, when those four fundamentals are out of whack, who cares about the other 216 measurement metrics and what were they exactly? Was metric number 172 decaf coffee consumption in Facebook’s cafeteria?

    Anyway, if you are an ad agency or a social platform and have realized that there is money to be made in arbitraging ambiguity, there is indeed endless fun to be had and endless money to be made….so for example, why pay full price for the Wall Street Journal audience when we can aggregate it for you, just for you, 81 percent of the Wall Street Journal audience, and sell it to you for only 17 per cent of the price…such precision, such accuracy, such balderdash.

    And so, as The Times of London has reported brilliantly, you end up with socially-aware, prestigious advertisers on extremely disreputable sites, and that would be hardcore porn sites, neo-fascist sites and Islamist sites, and worse than that, these sites may well getting a cut of the commission, so you are technically funding these nefarious activities. I’m not going to saturate you with slides, but as you all well know, a person without PowerPoint is Powerless and Pointless, so here are a couple of illustrative examples.

    juxtapositions with jaundice

    Naturally enough, legions of advertisers are now realizing that, at the very least, their reputation is at stake by such juxtapositions with jaundice. The ad agencies are also clearly at fault because they, too, have been arbitraging and prospering from digital ambiguity. The money in the ad business has shifted from actually making ads to serving ads, aggregating audiences, and ad tech, better known as fad tech. Until very recently, these agencies have not properly informed their clients about the potential consequences of advertising in the twilight zones of Google and Facebook sites.

    Now the embarrassment for these advertisers, naturally conscious of their image, is understandable, but the situation is far more serious than mere loss of face.
    Because of YouTube, that is Google, there is a real chance that some of these clients have been funding extremism, whether it be Islamist excess or neo-fascist nonsense, depending on the type of advertising, it is estimated by the ad industry that a YouTube partner, which I can’t believe some of these now are, could earn about 55 percent of the revenue from a video. The rate will vary with the type of ad, but you get the picture. In recent years, how many millions of dollars have been channeled to organizations that are an existential threat to our societies? Obviously, there will inevitably be more formal investigations by authorities in coming months, and it will be interesting to see where these investigations lead.

    And there is rightly much debate in the U.K. now about the encryption of WhatsApp messages that would provide an insight, alleged, into the activities of the terrorist behind last week’s tragic attack in the precincts of British Parliament. Now, of course, Facebook, the WhatsApp owner, said that it can’t assist – that a little rich from the company that, when it bought WhatsApp in 2014, said it would absolutely not share data between the Facebook function and the WhatsApp function. The very same company announced last year that, err, well actually, it would indeed share data to improve ad targeting – in other words, to enable Facebook to make more money from your personal data. So much for the original promise. Anyway, these sorts of obvious contradictions are starting to be highlighted – and the awakening is indeed becoming a reckoning.

    Provenance is profound and reputations are precious, and I do think that in this age of augmented reality and virtual reality, that actual reality will eventually make a comeback. To have experience is to live life to the full. Authenticated authenticity is an asset of increasing value in an age of the artificial. And understanding the ebb and flow of humanity will not be based on ersatz empathy, but real insight.

    And so while in this region, I thought it efficacious to give an example of how tastes are changing far faster than we realize, and that there is as much confluence as there is confusion.

    So, for example, it is fascinating to see beer drinking habits evolve in China and evolve exponentially. Despite being born in that rural Australian pub, I’m not really a beer drinker, but as a correspondent in China in the mid 1980s and as a visitor to far flung rather gritty, highly unhygienic places at that time, beer was sometimes the safest drink to have with a meal. Now the Chinese middle class, and it is still growing rapidly…have 600 million or is it 700 million Chinese been emancipated from grinding poverty since the market reforms began to take hold three decades ago?

    Anyway, now that middle class is sampling micro beers and tippling Belgian brews that have their origins in the abbeys and monasteries. Religion may have been the opiate of the masses, according to Karl Marx, but religious brews are now preferred drink of discerning Communists. Meanwhile, Chinese tourism is nothing new but we are certainly yet to comprehend the full scale of this changing tide of humanity. Those who do understand the changing needs and wants and desires of Chinese will prosper – the coming collapse of China has been coming for a long, long time. As Confucius, sagely noted – and if anyone is sage it is The Sage: “Some are born with knowledge, some derive it from study, and some acquire it only after a painful realization of their ignorance.” That latter category is the one I fall into.

    A second regional digression: When I was a correspondent in Japan, I spent time in rural Kyushu trying in the early 1990s to understand the fate of the provincial economy, provincial times, at the time, and the cultural consequences of economic rise and subsequent retreat. I came across a charming couple who had recently visited Hawaii – they were thoughtful and contemplative about the experience. They were on a group tour and the tour guide marshaling them had warned them not to venture out beyond the confines of the group itself – and had suggested that AIDS was a serious, almost random, threat. Meanwhile, their hotel wall was rather thin and they didn’t want offend the neighboring guests so they spent most of their time indoors, whispering.

    You can imagine why a risk-averse guide would tell such fear-inducing stories, but you can also imagine why that couple came back to Kyushu and told their friends in the community that international travel was not quite the thrilling experience that they had anticipated. And you can see how for this thoughtful, actually adventurous couple, the myth of Japanese touristic timidity was perpetuated. They were paralyzed by an early form of fake news.

    Perception and misperception are basically the buy and sell of social psychology. To get a different view of the world I visited a hedge fund in London recently. The founder’s own life story is fascinating, from having been the son of Russian exiles in Harbin, to becoming an officer in the Australian military and much more besides. Anyway, investors have all sorts of strategies, some taking advantage of micro movements in currencies and others looking for so-called value stocks. His strategy is to look for macro-political and economic movements that are being misjudged and therefore related assets are being mis-priced.

    And so at a peak time of rhetoric about the media and rhetoric from the media, perceptions, he believes, are particularly distorted. If he does navigate with nous through this foreign forest of misperceptions, he will surely become wealthier still, and any person in business able to discern the emerging reality from the hazy shapes on the horizon will benefit disproportionately.
    So if you can actually discern the virtue that is veracity in the midst of the manufactured morass, you will certainly be rich in spirit and, if it is one of your aims in life, you may even become wealthy.

    And so having assailed you all mercilessly with the fallacious, the faux, the fake, the fabricated and the downright fraudulent, may I finish with two quotes, one from the late, great David Foster Wallace:

    “The fraudulence paradox was that the more time and effort you put into trying to appear impressive or attractive to other people, the less impressive or attractive you felt inside — you were a fraud.”

    And the final quote from a different Marxist, Groucho Marx:

    “The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made.”

    Since 2013, Robert Thomson has been Chief Executive of News Corp, a global, diversified media and information services company that is home to Dow Jones & Company, The Wall Street Journal, the New York Post, The Times and The Sunday Times of London, The Australian and Fox Sports Australia, HarperCollins Publishers, and Move, Inc., operator of realtor.com, among other businesses. From 2008, Mr. Thomson served as Editor-in-Chief of Dow Jones and Managing Editor of the Journal. Previously, he was Editor of The Times and held several posts at the Financial Times. He began his career in journalism as a copyboy at The Herald in Melbourne in 1979, and also worked at the Sydney Morning Herald. A native of Torrumbarry, Australia, Mr. Thomson is the author and editor of several books, and in 2014 he was inducted into the Melbourne Press Club’s Media Hall of Fame.

    Tagged: fake news news corp robert thomson

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