"Through this investment, Facebook wants to make sure that reports about content that may violate our community standards can be dealt with even more effectively," a Facebook spokeswoman said.
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Facebook ground rules restrict bullying, harassment and threatening language but critics say the company does not do enough to enforce its stated procedures.
German weekly Der Spiegel first reported on Friday that the Bertelsmann unit Arvato has hired at least 100 people to monitor hate speech on behalf of Facebook. Facebook also employs some of its own staff to combat the issue.
Arvato, which provides digital, financial and customer relation outsourcing services to companies, declined to comment. The Bertelsmann unit had revenue of 4.66 billion euros ($5.08 billion) and had 70,000 employees worldwide in 2014.
In November, prosecutors in Hamburg launched an investigation into the social media platform for violating the country's tough laws against promoting hate speech.
Top German politicians and celebrities have voiced concern about the rise of anti-foreigner comments on Facebook and other social media as the country struggles to cope with a tide of new migrants that amounted to 1.1 million last year alone.
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Chancellor Angela Merkel urged Facebook to do more, and the Justice Ministry set up a task force with Facebook and other social networks and internet service providers with the aim of identifying criminal posts more quickly and taking them down.
The German leader is facing growing pressure to harden her line on refugees after police reports on New Year's Eve violence in Cologne documented rampant sexual assaults on women by gangs of young migrant men.
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