United Air: False Google Story Triggers Massive Sell-Off

A massive sell-off in United Airlines (UAUA) shares resulted after a false report about the company declaring bankruptcy appeared on Google (GOOG).

Shares of UAL lost 75% of its value in seconds, plummeting as low as $3 from $12.30 prior to the story appearing on Google.  Some investors in UAL stock lost a ton of money. The stock hit an all time low on heavy volume.

The shares bounced back after the market realized it was a 6-year old story on the company’s 2002 bankruptcy filing that appeared on Google.  Investors who sold on the news were stuck.

Google declined comment on the incident. Later, it blamed the Sentinel for posting the 2002 Chicago Tribune article on their website. The Nasdaq Stock Market, where UAL shares are listed, said trades triggered by the erroneous report wouldn’t be rescinded. The Google story then was picked up by Income Securities Advisors, a Florida investment newsletter, and disseminated over Bloomberg News triggering a wave of panic selling. It appeared as ”United Airlines files for Ch. 11 to cut costs.”   

As UAL’s stock crumbled and the company saw the headline on Bloomberg, a UAL spokesman told the news service that the report was inaccurate. Trading was quickly halted — but not before some investors dumped shares for as little as $3 apiece.

The Tribune said that Google highlighted the story from Sentinel’s website archives over the weekend, which generated traffic and caused the newspaper’s computer to move the story to a page of most-viewed articles.

But Google said the only reason its search engine “crawler” bothered with the story was that it was listed on the Sentinel page of most-viewed stories. ”It was a new item that said, ‘Hey, look here,’ ” Google spokesman Gabriel Stricker said.

So what can you do if false information about you or your company appeared on Google? Is Google liable? Case in point, the search query miserable failure was linked to President Bush for two years. What if this was you, what recourse do you have? Who pays for damage caused to you? Tell us what you think.

Comments

[Rich Gordon:]

The remaining mystery is, what caused the traffic on Saturday night/Sunday morning that elevated this 6-year-old story to the most-viewed list on the Sun-Sentinel Web site.

I think I have the answer: The time frame when this occurred would be the lowest-traffic period of the week, so even a small amount of usage (one click?) could lift the story to the fifth-most viewed position among business news articles on the Sun-Sentinel's site.

I reconstruct the timeline here, with some thoughts about what the real lessons of this story are:

www.readership.org/blo...

Rich Gordon
Medill School, Northwestern University

2008 Sep 10 12:07 PM

[waxsaw:]

the only right thing to do is to rescind the trades. this whole affair smells of fraud. people who were wiped out by margin calls or sold out by other triggers due to such an occurance ought to be made whole again and both the sentinel's owners, google and bloomberg need to be held accountable for the failures in their gathering and display mechanisms. wars could start due to something like this, let alone financial panics. how many other old stories sit as potential bombs in accessible archives?

2008 Sep 10 09:57 PM

[Scifi.Techie:]

May be Google listed that article as the first link. Aren't we supposed to check out the article clicking on the link?

Will you sell your stocks outright, seeing the company name coming as the first link in Google. ? Won't you read the article in the webpage before selling out !!?

If the data in the article dates back to 2002, we can't blame anyone.

googleschromium.blogsp.../

2008 Sep 11 06:00 AM

[ljk343@cm.t...:]

Since we don't know the shadow implications (fine print) only G00gle appears suspect........


On Sep 11 06:00 AM Scifi.Techie wrote:

> May be Google listed that article as the first link. Aren't we supposed
> to check out the article clicking on the link?
>
> Will you sell your stocks outright, seeing the company name coming
> as the first link in Google. ? Won't you read the article in the
> webpage before selling out !!?
>
> If the data in the article dates back to 2002, we can't blame anyone.
>
>
> googleschromium.blogsp.../

2008 Sep 11 08:24 AM

[User 260959:]

Google is a search engine, not a group of reporters who write stories, and it wasn't a "Google story" to begin with (false or otherwise) even if they were reporters. Also, it's not Google's fault how searches appear on their pages. Google doesn't put links on their pages in an intentional order. That's not how the search engine works. Granted there are implications to what shows up on their pages, they can't be blamed for "reporting news." Also, as someone else said, the article that was reported was years old and it's not Google's fault if people didn't take notice of that when reading the article itself.

2008 Sep 12 04:31 PM