» Google News Causes $1B Devaluation of United Airlines

Algorithms are at the heart of Google’s continued success with its search relevancy algorithm being the most noteworthy. However, other services that Google provide such as Google News require equally complex algorithms to search for, sort and display the latest news from around the world. The Google News algorithm is so well written that it can scour the internet for the latest news and have it appear within minutes of it being published all without any human intervention.

However, as with any algorithm there is potential for mistakes to be made and a few days ago a tiny mistake quickly exploded into a huge problem for several companies. United Airlines was the biggest victim as its share prices began plummeting before recovering when investors realized there was a mistake.

What happened was back in 2002 the Chicago Tribune published an article about United Airlines declaring bankruptcy which ran in the Florida Sun-Sentinel. The story was then dropped into an archive never to be seen again (or at least that was the plan). A couple days ago, the article resurfaced on the website via a widget that featured the most popular stories. For those of you who are familiar with how crawlers work you already know how this is going to end!

The Google News crawler eventually spidered website of the Florida Sun-Sentinel and in its “Popular Stories” box in the right navbar was the article about United Airlines declaring bankruptcy. The crawler saw this as new content and the article was added to the Google News index for everyone to read including an investment analyst who noticed the story and promptly posted the breaking news onto the bloomberg system. A quick sell off quickly ensued before Nasdaq halted trading of UAL stock.

The story only lasted 13 minutes before someone noticed the problem but by this time United Airlines share price fell from $12.16 to about $3. After Nasdaq resumed trading, it recovered part of the loss climbing back up to $10.92.

Now, computer geeks around the world are salivating at the opportunity to alter news archives to get another old story to appear on the front page of Google News to manipulate the stock market. What a crazy world we live in. Be careful with your money and don’t believe everything you read because it might not be the truth. Even if it is, it might have only been true 6 years ago! :)

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