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Microsoft Is Taking a Different Approach to News Than Apple

By Evan Niu, CFA – Jun 2, 2020 at 10:00AM

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The software giant is cutting workers in its news division in favor of artificial intelligence.

Microsoft (MSFT 3.38%) has been involved in the news in some form or fashion for far longer than its longtime rival Apple (AAPL 2.56%), most prominently with its partnership with NBC for MSNBC that dates back to the mid-'90s; Microsoft exited that pact in 2012. More recently, the software giant revamped its mobile news offerings a couple years ago, including its Microsoft News platform, while still maintaining the MSN network.

Meanwhile, Apple has continued to expand its Apple News platform, which now reaches 125 million people every month. Apple is betting big on human editors to curate the platform. Microsoft is now going the other way.

MSN interface displayed on tablets, smartphones, and a laptop

MSN is powered by Microsoft News. Image source: Microsoft.

Replacing people with robots

Business Insider reports that Microsoft has started laying off journalists and editors in its news division in favor of the almighty algorithm. The enterprise software juggernaut's plan is to instead rely more heavily on artificial intelligence (AI) to decide what content is shown on its Microsoft News platform.

Some of the impacted employees (approximately 50) are contractors that help in editorial decisions, according to the report. Microsoft said in 2018 that it had 800 human editors worldwide. At the time, the company had delivered over $600 million in revenue to publisher partners.

The move is not due to the COVID-19 crisis, which has crushed advertising spending and news outlets that rely on that form of revenue. Microsoft provided a statement to various outlets:

Like all companies, we evaluate our business on a regular basis. This can result in increased investment in some places and, from time to time, redeployment in others. These decisions are not the result of the current pandemic.

As much progress as Apple has made in growing its audience, Microsoft News remains much larger. The company says its platform reaches "nearly half a billion people in more than 140 countries and 28 languages," which also means that fundamental changes in editorial operations will have far-reaching implications to what news content people see all around the world.

Man vs. machine

Up until now, Microsoft's human editors would work in conjunction with AI, which would help scan and process content while analyzing information like categories and topics. The AI would also try to assess how popular an article might be, while also helping suggest complementary pictures. It doesn't sound like Microsoft is cutting all of its editorial workers, but robots are playing a growing role.

Other content platforms that lean on algorithmic curation have garnered massive criticisms in recent years, including Alphabet's YouTube and social giant Facebook. Algorithms often overweight engagement, which presents fundamental challenges, as sensational and misleading content frequently drives enormous levels of engagement. In no uncertain terms, robots have exacerbated the modern age of misinformation.

Presumably, Microsoft is pursuing the shift in an effort to cut costs while simultaneously exalting its AI technology. The company will need to navigate a delicate balance between those goals and the risk of contributing to the fake news problem.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple and Facebook. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, Facebook, and Microsoft. The Motley Fool recommends Comcast and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

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