Exclusive: Yahoo buys The Factual to add news credibility ratings

Yahoo has acquired The Factual, a company that uses algorithms to rate the credibility of news sources, Yahoo president and general manager Matt Sanchez told Axios.

Why it matters: The deal could provide Yahoo News' 200 million+ monthly visitors with ratings for the thousands of news sources Yahoo aggregates on its site.

• "One of the biggest things that we hear from our users is that they're worried about bias and how to understand the content that they're consuming," Sanchez said.

Details: With the transaction, which closed last month, The Factual's eight employees, including its founders, have joined Yahoo News full time.

• For now, The Factual will operate independently with its current branding, as Yahoo executives figure out the best way to integrate the company's technology with the syndicated and originally reported articles on its site.
• Eventually, Yahoo plans to bring The Factual's labels to the hundreds of thousands of articles Yahoo News distributes from thousands of news partners across 15 languages globally.
• Financial terms of the deal were not disclosed.

Be smart: While Yahoo has a set of its own criteria it applies when it adds syndication partners across all Yahoo properties, Sanchez said labels will help the readers "make their own informed decisions about what they're reading," which will add trust over time.

• "We think that'll build engagement and build a better business for Yahoo News," he said.
• For example, an article with a low-credibility score from The Factual may show a reader that the article includes a strong opinion not backed by fact, but that wouldn't necessarily mean it violates Yahoo's distribution standards, Sanchez said.
• Yahoo doesn't allow content that encourages violence or hate speech, but it does distribute an array of work from different publishers with different political perspectives and viewpoints.

How it works: Launched in 2019, The Factual uses artificial intelligence to rank articles based on four criteria: site quality, author expertise, article tone (level of opinion) and quality of sources.

• It creates a score for each article based on a weighted average of those qualities, which is presented to the reader via a label. The label also notes the political leaning of the outlet that produced the article.
• The Factual raised more than $2 million in pre-seed funding, mostly from Defy Ventures. The company currently rates 10,000+ news articles per day in English.

• The Factual will continue to license its technology to other companies, which is how it made money up until this point, but the acquisition wasn't a revenue play, Sanchez said.

What's next: For now, Yahoo's plan is to integrate The Factual's rating system within Yahoo News articles, not other Yahoo properties like Yahoo Finance or Yahoo Sports.

• "We don't have plans for sure to use it across other brands, but that doesn't mean we won't in the future," Sanchez said.

The big picture: The deal marks Yahoo's first acquisition since Apollo Global Management bought it and AOL for $5 billion from Verizon in 2021.

• Yahoo CEO Jim Lanzone previously said he wants to focus more on expanding the individual brands within Yahoo's portfolio and that he is interested in acquisitions to support those brands.
• Prior to the Apollo deal, Yahoo was experimenting with selling subscriptions to some of its stand-alone franchises, like Yahoo Fantasy or Yahoo Finance.
• Asked about subscriptions for Yahoo News, Sanchez said, "That's not where we're focused." Rather, the company is looking to test new features for Yahoo News that will increase reader trust and loyalty.