Events Remain Murky, But Automated Search, Trades Played RolesAs Tribune Co. and Google Inc. pointed fingers at each other over the glitch that cratered UAL Corp.'s stock Monday, blame spread to the computers that robotically troll the Web for news stories and execute stock trades automatically.
An old article about UAL's 2002 bankruptcy-court filing resurfaced Monday as an apparently fresh report on Google's news service. Stock in the parent company of United Airlines quickly dropped to $3 a share from nearly $12.50 before the Nasdaq Stock Market halted trading and UAL issued a statement denying any fresh Chapter 11 filing.
UAL's stock price ended Tuesday's session at $10.60, down 2.8% on the day and nearly 13% off Monday's open.
Nasdaq and lawyers for Tribune and UAL are investigating the incident, and the circumstances of the glitch remain murky.
Google traces the appearance of the 2002 article in its search engine to a process that began late last Saturday night. At 10:36 p.m. PDT, Google's "crawler" -- the technology that finds Web pages -- discovered a new link on the Web site of Tribune's South Florida Sun-Sentinel newspaper in a section called "Popular Stories: Business." The article -- which didn't carry a date but was published by the Chicago Tribune in December 2002 -- hadn't appeared there when Google's crawler last visited the page at 10:17 p.m., the company said.
It remains unclear how the old story rocketed onto the list of most popular stories. Tribune said online traffic began to tick up beginning earlier Saturday evening. Some UAL investors suspected there were efforts to manipulate Web traffic in order to sow fears about UAL's financial condition.
There may be a more innocuous explanation, however: Amid serious storms in Florida and on the East Coast, Web surfers checking for news about travel delays may have stumbled onto the old UAL story by mistake, and a small number of fresh hits may have been enough to drive it onto the list. A Tribune spokesman declined to say how many hits the article received but said there was no indication of fraud.
From the Sun-Sentinel site, the article became available through Google News service, accessible if a user searched for keywords like "United Airlines." The article didn't appear in any of the headlines on Google News's home page, but it was picked up and sent via email to people who had created a custom Google News alert about UAL or related topics.
The stock market opened Monday with no drop in UAL shares, but the UAL story began circulating widely via a posting by research firm Income Securities Advisors Inc. that was made available to users of Bloomberg L.P., the financial-news service widely watched on Wall Street. Shortly after a headline from the outdated report flashed across Bloomberg screens at about 10:45 a.m., UAL shares began a precipitous drop. Over the next 15 minutes, before Nasdaq halted trading, they dropped as low as $3.
It's not the first time erroneous news reports have swung stock prices, but the increasing reliance on Google, Yahoo and other news aggregators ratchets up the speed with which information -- correct or incorrect -- can spread across the globe.
News-aggregation sites come in many flavors, and the number and variety of offerings continue to grow. Some sites, like Google News, decide what to display based on algorithms. Others, like Digg.com, rely heavily on how users rate articles. A number of startups continue to try new approaches, including delivering news that is likely to be personally relevant to users because people they have identified as their friends are reading it.
Online-only sites with news and opinion such as Slate and the Huffington Post are viewed with far more skepticism than print and broadcast sources, according to a recent study from the Pew Research Center for People & the Press. But sites that simply aggregate news from traditional media sources, such as Google and Yahoo news, received better marks, with users saying they believe them about as much as they believe their daily newspapers.
Search engines remain an important source of traffic to news sites. They accounted for 20% of traffic to news and media Web sites in August 2008, fairly flat from the previous year, according to market-research company Hitwise. Google led the referrals, responsible for 14% of traffic to news and media sites that month, up from 13% in August 2007.
To some, the UAL glitch points to a still incomplete understanding by traditional news outlets of how Google and other search engines pick up their stories. Search-engine experts said the snafu could have been avoided if the Sun-Sentinel had provided a publication date for the original Tribune article. In that case, Internet analysts and Google said, the automated Google news crawler would have been far more likely to reject the story as irrelevant.
"This appears to be the result of bad search engine optimization" on the part of the Sun-Sentinel, said Peter Hershberg, a managing partner at Reprise Media Inc., a search and social media marketing firm.
The damage was exacerbated by the growing use on Wall Street of automated programs that trigger stock trades without any human interaction. The so-called algorithmic trading mechanisms, which buy and sell stocks based on news headlines and earnings data, were responsible for roughly a quarter of New York Stock Exchange trades in the last week of August.
Investors said simple human scrutiny would have indicated the UAL story was old, but computerized trading systems don't make such determinations.
"A trader can pull back before proceeding, but some of these less sophisticated [automated trading systems] can't do that," said Bernie McSherry, a senior vice president with New York institutional brokerage Cuttone & Co.
By: Shira Ovide & Jessica Vascellaro
Wall Street Journal; September 10, 2008
