Venture Forms to Moderate Content -- WSJ
September 19 2018 - 3:02AM
Dow Jones News
By Sara Germano
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 19, 2018).
BERLIN -- Bertelsmann SE has agreed to merge the part of its
business that offers content moderation services for the likes of
Facebook Inc. with a competitor, the German media conglomerate said
Tuesday.
Bertelsmann's Arvato customer relations management division runs
moderation centers in Germany and elsewhere, where workers pore
over content on Facebook that has been flagged as objectionable.
The task has taken on a higher profile as governments increasingly
demand moderation of online content.
But the unit hasn't been growing as quickly as Bertelsmann had
hoped, and the company said in January it was considering options
for the business. On Tuesday, it announced a merger between the
unit and the customer relations business of Morocco-based Saham
Group to form a new company in which both firms will retain a 50%
stake.
The move comes as the privately owned conglomerate sharpens its
focus on faster-growing parts of its empire, including digital
entertainment and online education.
The Gütersloh, Germany-based group owns or controls stakes in
book publisher Penguin Random House, music label BMG, and digital
entertainment provider RTL Group, among others, and has been adding
to its Bertelsmann Education Group with acquisitions as recently as
this week.
In a statement, Bertelsmann Chief Executive Thomas Rabe said his
firm planned to invest "several hundred million euro in the next
years" to the new firm.
Pending regulatory approval, the as-yet-unnamed new company was
expected to employ about 48,000 people in 25 countries with
revenues of about EUR1.2 billion, Bertelsmann said in a statement,
adding it anticipated the company will be formed by January.
Bertelsmann's Arvato CRM comprised roughly 22% of the
conglomerate's workforce but around 5% of its annual revenues. The
division is known for administering call centers, content
moderation and other services for clients that include Facebook. In
February, Arvato and Facebook agreed to a new long-term contract
that would increase the number of content moderators it supplies to
the social network to 1,000 from 700 in Berlin.
Arvato's CRM division came under public scrutiny earlier this
year after press reports alleged that its content moderators, whose
tasks include monitoring disturbing posts on Facebook, were working
without adequate psychological support.
A spokesman for the Berlin state office for occupational safety
and health said Tuesday that the agency had looked into the matter
and had now "reached a point of confidence that things are working
well there."
A spokesman for Bertelsmann declined to comment on what if any
impact the spinoff may have on its client relationship with
Facebook. Representatives for Facebook didn't immediately respond
to a request for comment.
The new firm will include Arvato's French-speaking businesses,
which Bertelsmann had previously said it intended to retain, and
will be helmed by Thomas Mackenbrock, a Bertelsmann veteran who
most recently served as chief strategy officer for Arvato. Saham
Group, which has partnered with Bertelsmann since 2004 on their
customer-relations businesses, is expected to name the new entity's
chairman of the board.
Bertelsmann will continue to manage other Arvato divisions,
including its financial services, supply chain, and IT
divisions.
The changes to Arvato follow initiatives by Bertelsmann to
expand its presence in the U.S. and in education, including a
planned acquisition of Wisconsin-based digital education firm
OnCourse Learning announced Monday. Last fall, the conglomerate
increased its stake in publisher Penguin Random House, and
executives have said they are looking to offset structural declines
in its printing division.
Write to Sara Germano at sara.germano@wsj.com
(END) Dow Jones Newswires
September 19, 2018 02:47 ET (06:47 GMT)
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