Meta has recently decided to scale back its third-party fact-checking efforts, starting in the United States. While Meta's stock experienced a slight dip the following day, the market’s muted reaction suggests that investors do not perceive this decision as having significant long-term consequences for Meta's value.
Over the decades, companies in various sectors have made similar decisions to minimize reliance on independent audits, checks, and assurances. Often motivated by cost-cutting, operational efficiency, or pushback against perceived burdensome regulations, this trend has become a recurring feature of corporate strategy. Let's look at how that went throughout history (I am cherry picking here, there are too many to count)
A Historical Perspective on Reducing Third-Party Oversight
Financial Services: Post-2008 Crisis
The 2008 financial crisis exposed significant gaps in third-party oversight, particularly with institutions like Lehman Brothers, which overstated their financial health. In the aftermath, many questioned the effectiveness of external audits. Regulators in the U.S., the U.K., and Brussels launched inquiries into auditing practices, and auditors faced a credibility crisis. While large auditing firms did not disappear, many had to adapt their approaches. Despite these changes, demand for independent audits remained strong in the long term, reinforced by regulations like the Sarbanes-Oxley Act (SOX), which mandates independent audits for publicly traded companies.
Healthcare: The Case of Theranos
Theranos, a health-tech startup, misled investors and regulators by circumventing external audits for its blood-testing technology. By avoiding third-party oversight, the company presented misleading claims, deceiving investors and patients. Despite the scandal, the healthcare industry’s reliance on third-party certifications and audits has largely remained intact. However, it's worth noting that auditors have increasingly invested in Life Sciences since 2005, ramping up service offerings and adopting new practices in the late 2000s to meet growth demands. Even after the Theranos debacle, the U.S. medical testing industry remains largely unregulated, according to ProPublica.
Aviation: Boeing and the Consequences of Reducing Safety Oversight
The aviation industry faced intense scrutiny after the Boeing 737 MAX crisis, which resulted from reduced external safety audits and certification processes. Boeing’s decision to reduce reliance on third-party audits and shift certification responsibilities to internal teams led to catastrophic consequences, including two fatal crashes. In response, demand for independent safety audits surged, particularly among U.S. regulators. Many firms within the sector strengthened their verification and compliance measures in the aftermath.
History suggests that when companies reduce their investment in independent verification, the demand for oversight will often resurge—typically with greater intensity—following a crisis.
Strategic Responses for Fact-Checkers
As Meta scales back its financial support for third-party fact-checkers,here's how key players may respond in the meantime :
AFP (Hub): With a diversified revenue model, AFP is well-positioned to consolidate its services and invest in innovative fact-checking methods.
Check Your Fact: Likely to face financial challenges due to its reliance on Meta funding, consolidation with larger entities or media agencies may be a viable option.
FactCheck.org: With 12% of its revenue tied to Meta in 2019, FactCheck.org may struggle to sustain operations independently and could seek partnerships or mergers.
Lead Stories: Given its moderate dependency on Meta, Lead Stories may leverage AI-powered tools while exploring collaborative opportunities.
PolitiFact: Backed by the Poynter Institute, PolitiFact is expected to innovate and expand, ensuring its credibility and operational stability.
Reuters Fact Check: As part of a larger media organization, Reuters is less reliant on Meta and will likely strengthen partnerships and explore new fact-checking methods.
The Future of Fact-Checking
As I've noted earlier on this blog, how people consume information has changed drastically. Empowering journalists to experiment with different storytelling formats and engage with communities authentically will be crucial in shaping the future of fact-checking. Some media organizations are already experimenting with innovative methods to engage directly with their audiences:
The Verge has launched a Twitter-like feed to foster direct, dynamic engagement with its audience.
Seen.tv creates first-person narratives to encourage active participation and build trust.
The News Movement focuses on social-first content strategies to keep pace with rapidly evolving news consumption habits.
Volv, a digital startup, delivers curated, personalized news designed to engage audiences.
Connecting Meta's decision - The bigger question to ask
A key question to consider is whether platform reduction in fact-checking efforts will also impact its ability to mitigate harmful content through engagement optimization. The incentives built into algorithms that promote sensationalist content are central to understanding the broader systemic risks.
If I were a regulator or a journalist, my primary concern would be the underlying systemic issue: what incentives exist for algorithmic boosting of fact-checked or other forms of content ? If fact checks are not included ranking systems and algorithms, what other counter measures exist, if any?
Related Posts
