Facebook Inc (FB) Meets Its Match in Fake News

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Giving credit where it's due, Facebook Inc (NASDAQ: FB ) has more than earned its place as the poster child of social networking. Alhough it didn't invent the idea - MySpace arguably gets the credit for that - Mark Zuckerberg made it part of the fabric of our society, and FB stock owners have reaped their justified reward.

Not everything Facebook has done is "top drawer" stuff, though, and the company's latest initiative to combat fake news is one of those less-than-elegant solutions.

In short, rather than simply find better ways of blocking fake news from appearing in your News Feed, Zuck has opted to merely dilute potentially fake news by comparing it to similar (and presumably real) news.

It doesn't quite solve the problem. And that problem is undeniable.

Fake News Is for Real

Although Facebook clearly didn't create it, Facebook was the vehicle through which news like Hillary Clinton's pizza shop/sex ring was circulated, the platform through which word spread that then-President Obama had banned the Pledge of Allegiance in the nation's schools, and the medium that helped spread word that Pope Francis had endorsed Donald Trump's candidacy . None of those things was true, yet to the average Facebook user that didn't know any better, those stories certainly looked legitimate.

The adverse impact on the value of FB stock was, surprisingly enough, little to none, perhaps suggesting that Facebook users, as well as advertisers, expect an open platform like Facebook to be abused from time to time. Still, Zuckerberg faced potential backlash if he didn't at least try to combat it, so action has been taken.

The initial response even looked pretty promising. The multi-pronged plan included better ways of detecting fake news stories posted at the social media site, a more effective means of reporting fake news and a more meaningful method of categorizing fake stories.

It was a good start. The next salvo of fake-news fighting, however, isn't quite as compelling.

If You Can't Beat 'Em, Join 'Em

Fast forward to Thursday of this week. That's when Facebook officially rolled out a tool that packages related articles with potentially fake news . The aim is to help users/readers determine if a particular story is real news or not by comparing it to legitimate news. At first blush it's an encouraging step. On second and third thought though, the measure raises red flags as much as it assures advertisers and users.

Above all else, the premise of diluting potentially fake news with topically-similar news articles is a tacit admission that Facebook has been unable to effectively block the appearance of fake news stories from feeds. Rather than squelching them, Facebook's next best course of action is to algorithmically throw more information about a matter at users, and hope they figure it out … a high expectation of human beings to be sure.

In that same vein, the tactic is also flawed in that it assumes users - many of whom are agenda-driven - care if a "news" article is legitimate or not. Some do, but some don't.

One only has to look at the political rhetoric that's dominated Facebook and Twitter Inc (NYSE: TWTR ) over the course of the past several months. Most users don't even think twice about sharing a story that is clearly beyond belief. (Hillary Clinton running a brothel in the back of a pizza parlor? Really? ) The game is painting an overwhelmingly ugly picture of your opponent or competitor, whether with a truth or a lie.

The mindset is less harsh on non-political fronts, where mere web traffic may be the primary goal. The underlying approach is still the same, though. That is, deliver a shocking-but-perhaps-believable headline.

In that light, Facebook's latest effort to combat fake news solves nothing. Many users will still gravitate to fake stories, proactively overlooking the true ones right below or above the fake ones.

Bottom Line for FB Stock

It's one of those things nobody can say out loud but many people say to themselves - they know fake news can't entirely be eliminated from Facebook, nor do many people really want it to be. Nothing draws web traffic like controversy, and on the web, traffic is revenue.

That's why Facebook's fairly inept anti-fake-news effort won't work against FB stock because it's largely ineffective. Indeed, if anything, adding more real stories to the mix rather than culling fake ones altogether adds more links to the mix, and gives users even more goodies to click on.

Still, one can't help but wonder how long Facebook can go on as it is without taking a true hard-line approach to combating sham stories. The only true solutions is to de-automate the process altogether and make it a human-curated one.

Somehow that move doesn't seem to be on the horizon.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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The post Facebook Inc (FB) Meets Its Match in Fake News appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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