The Age of Fake News

Evaluating its impact through social media & our responsibility against it

You are scrolling down your Facebook newsfeed and you come across something titled “Breaking News:…”. Maybe your high school teacher posted it. Maybe a friend of a friend did. Either way you don’t really think about it. You read the headline and are shocked. Quickly, you click on the link. It takes you to a news site that you have never seen before. It is only when you start reading the text when you start to think that this may be too shocking to be true. There are some bits and pieces that just don’t seem to add up. You scroll back to Facebook and find that a few other people have commented on the post – and surprisingly, they all seem to believe it. You, my friend, have just engaged with ‘Fake News’. 

In the past year or so, the concept of ‘Fake News’ has garnered a significant amount of attention, partly due to President Trump’s continuous attacks on traditional media and recent upheaval within political press. Both Hillary Clinton and Donald Trump’s camps have made claims about how ‘Fake News’ affected the 2016 presidential election. Trump, however, goes a step further by voicing his beliefs that different legacy news sites are in fact non-credible, untrustworthy press. It is yet to be seen if his comments will affect the future of these news sites, but what is for certain is that assumed “credible” sources will come under greater scrutiny. This is a nerve-wracking situation, especially in the United States, wherethe power and goodness of democracy have always been heavily associated with the freedom of press. 

On the other hand, social media has also playedan increasingly important role in the generation of fake news. Even as traditional media, such as cable stations and newspapers, are drawing record audiences, according to Forbes Magazine , the number of full-time daily journalists has dropped to nearly half of what it was in 2000 .  A byproduct of of social media’s impact that is facilitating the rise of fake news is that it is changing the barriers of journalism. Whereas in the past only established journalists working at reputable organizations would be able to reach a wide audience, any Twitter handle or Instagram account can now generate the same amount of buzz. 

There are two primary categories of fake news. The first utilizes sources that are deliberately publishing incorrect or unproven information, while the second passes opinionated judgments as fact. These two categories are often interlinked, as readers who have read incorrect information may base their judgments on what they have read. 

So then, how does fake news relate to the financial market? Indeed, it can be said that the market is both driven by and based on opinion. Everyone thinks differently, and what one may deem to be a risk may seem like an excellent opportunity for another., All capable investors, however,  do their homework before making any decisions regarding their investments.  They first have to understand the company’s business. They also have to identify strengths and weaknesses based on a company’s past data. Most importantly, they have to be constantly looking at the state of the specific market. The bottom line is that they have to be able to easily access fast, reliable information that they know they can trust. 

Past examples show that this bottom line has been broken due to Fake News. In 2013, a Chinese reporter named Chen Yongzhou was arrested for accepting bribes from a competitor to the construction company Zoomlion. The Guardian reports that Chen, who was working for the New Express newspapers, wrote more than 10 news stories with false information regarding Zoomlion’s abnormal sales practices and wrongful handling of state assets. State broadcaster China Central Television (known as CCTV) aired footage of a handcuffed Chen who admittedto his wrongdoing, citing greed as his motivation for accepting the bribes. New Express newspapers later admitted to not carefully reviewing the articles before publishing. However, the effects of these articles couldn’t be erased – they ultimately resulted in widespread criticism of the company, and in the same period during which the articles were published, Zoomlion’s stock price fell around 26.9% on the Hong Kong stock exchange. Also in 2013, according to Forbes Magazine, “130 billion in stock value was wiped out in a matter of minutes following an AP tweet about a supposing explosion that injured the then President Barack Obama.” 

These are just a few of the many examples of how fake news has ultimately affected the financial world. Unfortunately, as social media becomes increasingly prevalent, it is likely that these kind of situations will become more common. Let’s look at the impact of a mere tweet. Last year, a man named Eric Tucker passedby downtown Austin and tweeted a series of photos of a group of large buses with a caption that stated that paid protestors were being bused to demonstrations against then President-elect Donald J. Trump. His tweet was posted to the Reddit community, and soon linked to Free Republic, a conservative discussion forum, and multiple Facebook pages. Journalists began calling. Ultimately, according to the LA Times the post was shared at least 16,000 times on Twitter and more than 350,000 times on Facebook. Even Trump personally tweeted about it. Unfortunately, however, Tucker was wrong – the buses were hired by a company named Tableau Software which was holding a conference. Eric Tucker’s story is both mystifying and frightening : social media has enabled even a simple tweet from a man with fewer than 100 followers to go viral, and to reach the attention of legitimate journalists. It is uncertain how many articles that haven’t been factually checked can have this kind of effect. If this ended up being an attack on a particular financial market, the results would be unimaginable.

It also must be said that investors don’t tend to rely on social media as legitimate news. TheForbes article “Can Fake News Impact the Stock Market?”notes that most business people rely on only Bloomberg, Reuters, and Financial Times as trustworthy sources. Because of that, at the stock level, the effect of fake news appears to have been minimal thus far. This is not to say that people are not worried. Indeed, many individuals, including those working for tech giants such as Facebook and Google have been trying to combat Fake News in different ways. At first, Facebook had a team of professional journalists who would curate the “trending” news box that appears next to the Facebook newsfeed. However, they struggled with maintaining objectivity as the team appeared to routinely suppress trending stories that were more conservative. 

After this bias was discovered, Facebook terminated the entire team and began using ‘detection algorithms’ to decipher the reliability of particular pieces of content. This method also proved faulty, as it placed “user engagement” as the first priority in determining whether the piece of information was truthful. This caused dramatic articles that drew attention to have high “engagement” to be judged as accurate, even though the most dramatic stories were often less accurate. More developments and improvements have been suggested, with algorithms rating user credibility scores potentially harkening a return to the fact checking era of “professional” journalism. 

Even with the development of better algorithms, this doesn’t mean that we should be any less vigilant when it comes to being aware of Fake News. Self-monitoring is the first step toresisting fake news. Content both true and false will continue live amongst each other in the sphere of media, so we must learn to look at news differently and not blindly believe everything that we read. We need to learn to fact check from different sources, evaluate the author’s background and past work, and not base our opinions solely off articles posted by friends on our Facebook feed. Remember that you are the first line of defense to stopping Fake News.