Bertelsmann to merge Facebook-moderation unit with rival
Move comes as the conglomerate sharpens focus on faster-growing parts of its empire
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, Germanybased 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 1.2 billion euros, 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.”
Aspokesman 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.